DECENNIAL REPORT, 1882-91

    The Inspector General's Circular despatch NO.524, Second Series, calls upon each Commissioner for a Report upon the condition of his port and of the province in which it is situated, and upon the progress made during the 10 years 1882-91, and enumerates several of the subjects to be considered. In giving effect to these instruction here it is necessary to request that  allowance be made for the special conditions of the district, and that some, perhaps unusual, latitude be allowed the writer in selecting the points this Report shall deal with. For, on the one hand, five full years have not yet passed since the Inspectorate assumed control of the Lappa stations, and no  statistics suitable for purposes of comparison are available for the years prior to that assumption of control. On the other hand, the Canton, Lappa, and Kowloon districts are in such close proximity and are so intimately connected that even had the two latter offices at their command the information and records possessed by the older Custom House, the discussion of the same subjects by all three would be liable to result in useless repetition. Under these circumstances, the Inspector General; s intention will, it would seem, be best fulfilled if attention be principally directed to the peculiarities which differentiate the Lappa work from that of the Treaty port offices-the control of Native, instead of Foreign, shipping, and the intercourse entailed by that control with branches of the administration relations with which seldom exist elsewhere.

    (a)History Of Stations And Of Taxation At Them--The Lappa Commissioner had under his control two principal stations--one on the smaller Malowchow Island () to the immediate west of the entrance of Macao Inner Harbour; the other outside the walled town of Chienshan(), termed by the Portuguese Casa Branca, at the head of the same harbour. To the latter are subordinated three sub-stations-those of Kwanchiap() and Juttai(), situated to the north-west and north-east of the barrier, or Porta di Cerco, on the isthmus uniting Macao this Heungshan, and that of Shekkok(), on the west shore of Macao Inner Harbour. These two principal stations, in the Heungshan  district(), together with the four in the Sanon district (), namely, Capsuimoon()Changchow(), Fotochow (or), and Kowloon(), now administered by the Kowloon Commissioner, constituted the six maritime stations which some years ago formed the subject of such frequent complaint of the part of the Hongkong and Macao governments, on the ground that the procedure followed at them was of so harassing a character as to threaten the life of the junk trade of those ports.

Though up to 1866 the import of opium into China was restricted by regulation to Foreign vessels, smuggling of that article by Native craft from both Hongkong and Macao had been carried on for years on a very extensive scale. Fleets of Junks engaged in this illicit trade were accustomed to rendezvous in both places, from which, if circumstances favoured them, they would slip quietly away with their valuable cargo; but if they could not do that, being well manned and heavily armed they were not only able, but ready, to match themselves against any preventive force that could be sent to intercept them. It was estimated at that time that Duty was paid on only about one-tenth of the opium received from Hongkong by the towns along the North and West Rivers which should have drawn their supplies from Canton; and it was known that over 10,000(probably nearly 15,000)chests were carried annually to Macao, almost all of which was subsequently smuggled thence into the various ports on the west coast. As the efforts to suppress this contraband trade had proved unsuccessful, it was decided to endeavour to put it on a legalised basis, in November 1866, therefore, His Excellency Jui Lin(), then Governor General of the Liang Kwang, Partially relaxed the prohibition of the carriage of opium by Native boats and sanctioned its conveyance by them to Tungkun(), Sanui(), Shuntak(), Heungshan(),and Hoiping(), This measure, however, did not  effect the result hoped for. The Governor General, therefore-- after consultation with the British Consul at Canton, the late Sir Brooke Robertson,-determined to establish collectorates in Chinese waters at the gates of Hongkong and Macao, at which gun-boats would be stationed to enforce payment of Likin on the opium passing. In the Governor General's proclamation of the 1^st July 1868 the places named as the sites of these collectorates are: Capsuimoon, Lyeemoon(, i. e., Fotochow)and Kowloon, in the Sanon district; Taipa ()and  Colowan ()-two islands since occupied by Macao-- and Chienshan, in the Heungshan district. Two other stations were added shortly after-one at Changchow, to the west of Hongkong, the other on the Kung-pei-wan(, from which this office takes its name in Chinese), a small bay on the sounthern shore of Lappa(), immediately north of Malowchow Island. On the other hand, the stations on Taipa and Colowan, if established, must have been abolished after but a short time. Opium passing these stations paid at them Likin alone, and as it amounted to but Tls.16 per chest, against a Tariff Duty of Tls.30 per picul, this difference in favour of Native craft soon began to further diminish the Canton Customs receipts. The Inspector General therefore brought the matter to the notice of the Tsungli Yamen ,and proposed that the Foreign Customs should establish collectorates for the levy of full Tariff Duty on Native-borne opium alongside the Governor General's stations. After being laid before the Throne, the proposal was referred to the Board of Revenue and the provincial authorities for consideration and report. Ultimately it was decided to establish the stations, but to  place them under the control of the Superintendent of Hoppo; and a proclamation, issued on the 27th June 1871, notified the actual establishment of them, that on Kung-pei-wan being at the same time removed to its present site, the smaller Malowchow Island. Owing, however, to the popular excitement caused by this measure in Macao, and to the difficulties between the Portuguese and Chinese authorities which resulted, it was not till the following year(1872)that the collection of Duty began. At the commencement, Duties were levied at these stations on opium only; but some time after Wen T’ien() succeeded Ch’ung Li()as Hoppo, in 1873, Duties on general cargo were also collected and Customs offices established in the four lower prefectures of Kochow, Luichow, Kiungchow, and Limchow, Merchants, However, maintain that the Hoppo's intention was, not to substitute the new stations for those already existing on the mainland, but to check, smuggling by offering inducements to the west coast traders to report at Malowchow, and that with this object such vessels, instead of paying Duties there, were allowed, on payment of a fee of $8,to take out a pass, which entitled them, on arrival at their destination, to a reduction in Duty of 40 per cent. on their Foreign cargo. Duties were, however, levied there on cargo outwards to Macao. What the special advantage of such a system was is not clear ,but its effect was to make Macao the head-quarters of the west coast traffic. Later, in 1886, in order to raise funds to meet the indebtedness incurred by him when providing for the defence of the province against a possible attack by the French during the period  of "reprisals" - or undeclared war with all the drawbacks of war,-then recently terminated by Treaty, the then Governor General, Chang Chih-Tung(),determined to utilise his Opium Likin collectorates at the six stations for the levy of Likin on merchandise generally. So strong, however, was the opposition aroused on the part of junk-owners and of Native merchants that they suspended all trade for several weeks. This measure proved without effect, and traders had to submit. The new tax, which was termed "Supplementary Kikin"(), was levied from the 17th July on all goods passing the stations inwards or outwards. But as junks going seaward from Canton frequently succeeded in slipping past the stations, a similar collectorate was, a few months later, established there also.

A few words are necessary regarding the nature of the taxation in force. A Memorial addressed to the Throne by the Board of Revenue in  1875, on the subject of Likin, specifies the year 1861 as the date of the introduction of this tax. This, however, is an error. Likin was introduced into this province in 1857 or 1858,to provide for military expenditure, and it had then been already collected for some time in the Yangtze provinces, the procedure in which was taken as the model to be followed in Kwangtung. As a fact, the Kwangtung practice appears never to have conformed to that followed on the Yangtze. There, or at least in Chehkiang province, Likin was divided into hsing-li()and tso-li(),the former levied on goods in transit, the latter at the place of production and/or consumption. Each comprised two levies, at the rate of 2 per cent. each-one termed chi-li(),the other yen-li(),-or 8 per cent, ad valorem in all. In Kwangtung the stations on the North River at first only levied one ch'l-li and one yen-li on goods passing up or down river; while those on the East and West Rivers conteted themsevles with the levy of one ch'i-li only, the yen-li being omitted, At first, therefore, the hsing-li alone was collected in Kwangtung. Later the tso-li was also introduced. It was known on the East River as tso-li()or tso-ku(), on the West River as fou-li(), and on the North River, which flows between them, indiscriminately by either one or the other name. It is only collected on the principal productions of each place, so that good taxable at one place are exempted at another; and though it is nominally divided into import and export, each leviable at half tariff rates, both are, as a fact, seldom, if ever, collected, Thus the rule now in force has grown up, that all merchandise in liable to three levies of Likin, the Ch'i-li, the yen-li, and the tso-li- the first two at full tariff rates of 2 percent, the last a half tariff rate of 1 per cent, or 5 per cent, in all. Merchandise, if its route lay over a short distance, might not be liable to all these levies; on the other hand, it could not be liable to more, however far it went, so long as it remained within the province and in its original condition, change, of boat or division of the orgimal consignment rendering the goods liable to payment afresh, just as though they were and original shipment. This rule applies to goods passing these stations the "Supplementary" or "Maritime " Likin collected at them being considers as substitute for the tso-li and levied, therefore, at half tariff rates. Officials of wide experience in different Likin collectorates state most positively that original shipments are never within the provincial limits called upon to pay more than two and a half full tariff rates, or 5 per cent, nominally, thought, in fact, the tax is much heavier, the rates fixed in the tariff representing in the majority of cases far maor than 2 per cent. It is also but fair to add that merchants directly traverse this official statement ,and aver that they have often to pay more than two and a half full levies- e.g., that goods from Macao to Shiuhing pay three and a half times.

When the "Supplementary" or "Maritime" Likin was established ,it seemed likely that, at least at the outset, the receipts would not be sufficient to supply the Tls.400,000 required annually to provide interest and sinking fund for the loans cotracted, An extra levy, termed "Coast Defence Tax"(), was therefore decided on. this was collected upon almost all goods, both Native and Foreign; but the collection the each case was farmed, Foreign piece goods alone excepted-the tax on which was levied at these stations. Thus, when the Inspectorate assumed control of the stations its province was to levy Likin at half rates according to the provincial tariff, "Defence Tax" on piece goods. and Duties on all merchandise-an Imperial Edict having been issued directing that Duties on goods passing these stations were to be collected at them, not left to be collected elsewhere. Before passing to the consideration of the causes which led to the transfer of the control of these station from the local authorities to the Inspectorate, it may be well to anticipate somewhat, and briefly enumerated the changes in taxation which have occurred during the past five years. Shortly before his transfer from the Viceroyalty of the Liang Kwang to that of the Hukwang. His Excellency Chang Chih-Tung Satisfied himself that "Maritime Likin" receipts at Lappa, Kowloon, and Canton, supplemented by the amount received for the farm of sulphur and saltpetre throughout the province, would, without and from the "Defence Tax" amount to more than the Tls.400,000 required. In October 1899, therefore, he ordered the discontinuance of this latter lvey, and authorised a reduction of 30 per cent. in the Likin charged on tea grown in Kwngtung. This opinion, however, was not shared by this successor, the present Governor General, who found that the ordinary revenue of the province was insufficient, after provision had been made for current expenditure, to meet the liabilities already incurred in connexion with the erection of forts along the coast; and in the summer of 1890 this tax was therefore re-established with imperial sanction. Its name was changed to "Battery Tax"(), but it was levied at the same rates and under the same rules as that abolished the year previous, except that not only was the collection on piece goods, as in the case of the "Defence Tax", entrusted to the stations, but also that on kerosene oil, raw cotton and yarn, matches, and wax. In a Memorial to the Throne reporting his action the Governor General states that (the goods above mentioned apart) this tax had been farmed to 85 firms, all bona fide dealers in the articles with respect to which the farms were granted ,and that the revenue accruing from these farms would amount to Tls.295,000. In addition, there is the official collection, which at Kowloon and Lappa alone would produce about Tls.200,000. Making allowance for the offices at Treaty ports, the annual receipts should therefore considerably exceed Tls.500,000. In connexion with the establishment of this tax an interesting discussion arose as to the relative merits of collection by a farm or by officials. The piece good guild at Canton presented a series of petitions to this office, begging that the collection on those goods might be farmed to themselves instead of being levied at the stations. They admitted that at the rates fixed by the Lilin Board the collection would amount to considerably more than the sum they had offered for the farm -- $30,000-- and explained their modus operandi to be to keep open accounts with the several importing hongs(of whose operations they  would, of course, be fully cognizant), and, after the lapse of a specified time, to calculate the sum due from each on the goods received; in other words, though nominally collecting according to the fixed tariff, they would practically grant rebates to each importing firm of all sums beyond the quota each should pay according to the volume of its business. In this way, the petitioners argued, the Government would receive the sum for which it was willing to sell the monopoly, and the surplus, instead of going into the pockets of the farmers, as it would do it they were unconnected with the trade, would be returned pro rara to those who had contributed towards it - an arrangement which would tend to reduce the burden of the tax. These arguments are undoubtedly deserving of consideration. Defence against invasion is one of the paramount necessities of national existence, and to provide defence funds are required. So long as these funds are secured by the farm system, the drawbacks inseparably connected with that system might, so far at least as exports are concerned, be minimised by vesting the farm in the guild interested, because, knowing the transactions of each individual firm taking part in the trade, the contribution of each can be assessed without difficulty ,and without the expense of maintaining a preventive service. This has, it is said, been done at Canton in the case of the tea and the silk guilds, with  considerable advantage as regards reduction both in the sums to be  paid by merchants and in the number of complaints of interference with trade. The arguments are however, open to two objections. First, the petitioners, admitted that the collection would yield much more than they undertook to give for the farm-indeed, to be in a position to diminish the burden of the tax by distributing the difference among those interested is the avowed reason for their petition ;if that is so, will not others not connected with the trade come forward and offer a larger sum? and if they do, is it likely that the higher offer will be rejected  simply because it will be disadvantageous to the guild? Secondly, is the farm system, generally speaking, a better system than official? It is simply a commercial transaction from which profit is to be gained by the farmers. To gain that profit they car little to what extent their procedure may interfere with trade; and if, n spite of all, they find their hopes of profit disappointed, they do not hesitate to first withhold payment of the sums promised and then withdraw from their contract altogether, The utter wastefulness of this farm system cannot be better exemplified than by reference  to what has taken place with regard to the collection of Likin on kerosene oil. After having paid for several years $63,000 annually for the monopoly the farmers ,on the expiration of their contract, were forced by competitive offers to advance their did to $90,000 per annum. These terms were accepted. The contract was, however, subsequently cancelled and the collection resumed by the officials. Though the rate of levy continued the same as that collected by the farmer, yet between the 1st October 1890 and 31st March 1981 the Kowloown and Lappa stations alone collected Tls.112,689, equivalent to $156,512; in other words, in six months they collected, at the farmer's rates, about 75 per cant. more than the farmer would have paid into the treasury in 12 months. The more statesmanlike policy, therefore, would be to abolish the farm system entirely; to fix the sum which is to be obtained from the taxation of a certain category of goods; and to reduce the amount leviable till it yields no more than the sum required.

Causes Which Led To The Establishment Of The Inspectorate At The Six Stations-The Agreement between Great Britain and China signed at Chefoo on the 13th September 1867 contained among its clauses the following:-- "Section:Tracd-7. The Governor of Hongkong having long complained of the interference of the Canton Customs revenue cruisers with the junk trade of that Colony, the Chinese Government agrees to the appointment of a Commission, to consist of a British Consul, an officer of the Hongkong government ,and a Chinese official of equal rank, in order to the establishment of some system that shall enable the Chinese Government to protect its revenue without prejudice to the interests of the Coolny;" and  " 3. On opium Sir Thomas Wade will move his Government to sanction an arrangement different from  that affecting other imports. British merchants, when opium is bright into port, will be obliged to have it taken cognizance of by the Customs, and deposited in bond, either in a warehouse or a receiving hulk ,until such time as there is a sale for it. The importer will then pay the Tariff Duty upon it, and the purchasers the Likin, in order to the prevention of the evasion of the Duty. The amount of Likin to be collected will be decided by the different provincial governments according to the circumstances of each. "

Later, the Governments of Great Britain and China, considering(among other things) that the terms of clause3, above quoted, " are not sufficiently explicit to serve as an efficient regulation for the traffic in opium, and recognising the desirability of placing restrictions on the consumption of opium, have agreed to the present Additional Article, "which was signed in London the 18th July 1885.—

2. In lieu of the arrangement respecting opium proposed in clause 3 of sectionof the Chefoo Agreement, it is agreed that Foreign opium, when imported into China, shall be taken cognizance of by the Imperial Maritime Customs, and shall be deposited in bond, either in warehouses or receiving hulks which have been approved of by the Customs, and that it shall not be removed thence until there shall been  paid to the Customs the Tariff Duty of 30 taels per chest of 100 catties, and also a sum not exceeding 80 taels per like chest as Likin.

" 3. It is agreed that the aforesaid Import and Likin Duties having been paid, the owner shall be allowed to have the opium repacked in bond under the supervision of the Customs, and put into packages of such assorted sizes as he may select from such sizes as shall have been agreed upon by the Customs authorities and British Consul at the port of entry.

"The Customs shall then, if required, issue gratuitously to the owner a Transit Certificate for each such package, or one for any number of packages at the option of the owner.

"Such Certificate  shall free the opium to which it applies from the imposition of any further tax or Duty whilst in transport in the interior, provided that the package has not been opened, and that the Customs seals, marks, and numbers on the packages have not been effaced or tampered with," etc.

The assent of the Foreign Powers, other British, interested in the trade of China having been obtained to the  terms of this Additional Article, a Commission was nominated in accordance with the terms of clause 7 of sectionof the Chefoo Convention, consisting of Mr.(now Sir), JAMES RUSSELL, Puisen Judge of HongKong: Sir ROBERT HART,K,C,M.G. Inspector General of Customs ,and SHAO, Taot'ai of Shanghai, Joint Commissioners for China; and Mr. BYRON BRENNAN,H.B.M.'S Consul at  Tientsin. On the 11th September 1886 an Agreement was signed, which stipulated, among other things, hat an office under the Foreign Inspectorate should be established on Chinese territory in Kowloon for the sale of Chinese Opium Duty Certificates, and that the Foreign Inspecctorate should be responsible for the entire control of that office. Later, a Convention on similar lines was arranged with the Portuguese authorities with respect to Macao, the office of the Foreign Inspectorate to be located on Lappa. In fulfilment of this Agreement, the Lappa Customs was opened on the 2nd April 1887 for the collection of Tariff Import Duty (Hk.Tls.30) and Convention Likin (Hk.Tls.80 per picul) on opium, and of Provincial Likin and Ching-fei Tax on general cargo at the rates fixed by the provincial tariffs received from the Governor General of the Liang Kwang. It was not, hoeever, till the 1^st July of the same year that the collection of Native Duties on general cargo commenced, at the rates, fixed by he Native Custom House tariff received from the Hoppo or Superintendent of Customs at Canton. It is gratifying to be able to add that the regime thus introduced has worked smoothly, and has given satisfaction both to Chinese merchants and to the neighbouring Portuguese Colony of Macao. Junk-masters are pleased that the Duties are fixed in amount and collected according to a known tariff ,and are no longer supplemented by levies of uncertain amount for paper, pens, ink, etc., as was previously customary. Macao has spoken for itself. Owing to the decline in he trade of Macao, which had made itself manifest from 1884 onwards, a Commission, consisting of two municipal councillors, the Government senior interpreter, and two prominent Chinese merchants ,was appointed by His Excellency the Governor to consider the causes of this decline and to suggest the means best calculated to arrest them. In its report, which was the result of investigations extending over seven months, and was published in the "Boletin da Provincia" of the 12th November 1889, the Commission refers in the following words to the results of the Convention with China and of the Lappa Customs regime:-

The causes which have led to the improvement already called attention on in the trade of Macao during the year 1883 are:_

 "1. The confidence given to Chinese merchants by the conclusion of the Chino- Portuguese Treaty, which defined the political status of this Colony, and with that confidence drew hither the capital needed to increase trade.

"2. The liberal manner in which the Foreign Inspectorate of Chinese Customs has treated the Chinese merchants of Macao, by abolishing taxes on their trade and granting them concession-a treatment which has given a large impetus to trade.

"It is not only the testimony of Chinese merchants of this city, but it is also the practical experience of the members of the Commission in local business, that in these two points alone is to be found explanation of the commercial improvement which took place in 1888."

(b)TRADE.-This office not having functioned during the whole of the year 1887, and large quantities of Opium and other goods having been passed, in anticipation of the change of regime, at reduced rates of Duty, the incomplete figures for that year are valueless for purposes of comparison, During the following four years, 1888-91, the average annual value of the trade with China has been Hk.Tls.9,487,000, divided thus: Foreign Imports, Hk.Tls.3,797000; Native Imports, Hk.Tls.1,879,000; and Native Exports, Hk.Tls.3,811,000. The average value of the cargo carried by junks between Hongkong and Macao had been Hk.Tls.3,610,00, consisting of cargo from Hongkong valued at Hk.Tls. 2,486,000, and of cargo sent to Hongkong valued at Hk.Tls.1,145,000. Trade has increased in value each, year down to the close of 1890,the advance in that year being exceptionally large, in consequence mainly of the abolition of the Ching-fei Tax late in 1889. 1891 shows a decline of nearly Hk.Tls.1,500,000, which is attributable largely to the re-imposition of that tax, but partly to reductions of Duty granted by the Hoppo and of Likin by the Canton bureau, which deflected shipments hence to Canton, and partly to causes (which will be specially  treated under (z.)) affecting the position of Macao as a commercial centre. The comparative tables which follow of the principal articles comprised in this trade and of the values of the trade with the several prefectures, will, it is hoped present in a convenient form such information as may be desired in this connexion.

             PRINCIPAL ARTICLES OF LMPORT,1888-91 .

                    Value Of Junk Trade And From Hongkong,1888-91

                Value Of Trade With Each Prefecture,1888-91.

    With reference to the comparative table of the value of the trade with  each prefecture, it should be stated that though this table shows accurately the values of the goods going to or received from each of the prefectures named, so far as this office is concerned ,it does not show with equal accuracy the importance of each prefecture as a center of consumption. The reason it that trade in this district exists still in a stage of barter. There are no banks hero to remit the proceeds of sales. Hence, when goods are sent here for sale the consignees buy with the proceeds such goods as will be readily exchanged for other goods; for example, if Kongmum or Shikki sends here goods for sale, the proceeds of those goods, in default of bank drafts are invested in goods which can be readily sold to other ports sending their goods to it for sale. In the case of the majority of goods it is impossible to trace reshipment, but in the case of Opium this is possible from the labels affixed; and the examinations of cargo made by Customs cruisers and launches show that Opium shipped hence to Kongmun and Shikki is frequently reshipped thence to the four lower prefectures. And what has been shown to be true of Opium is probably true of other goods.

(c)Revenue -- The Revenue collected at this office during the past four years has been as follows:_

    The export of Rice and Paddy from China is forbidden by law. Some 12 years ago, however, representations were made to the Governor General, Liu Kun-I that wealthy Chinese residing in Macao possessed considerable landed property within the neighbouring districts of China which they let out on lease, the rent being payable in Macao in kind, but that conveyance of this rent in kind was constantly made an excuse for exactions by cruisers, on the ground that the boats concerned were infringing the prohibition against the export of grain. The Governor General was therefore were infringing the prohibition against the export of grain. The Governor General was therefore prayed to sanction the conveyance of this rent grain to Macao, if covered by certificates issued by a special guild of local notables which it was proposed to establish, and in quantities not exceeding 200 piculs in one boat. This he did. The Rice produced in Southern Kwangtung being, however ,in great demand among the emigrants to the Straits, Australia, and California, Partly because of its superior quality and partly because it comes from their own neighbourhood, this concession was soon converted into a means of sending abroad large quantities of grain which did not fall within its provisions, such illegal shipments being estimated by the Native officials to amount to fully 500,000 piculs of Rice annually. The Governor General being desirous of suppressing this illicit traffic, he was strongly advised to legalise the export, it being pointed out that in this case there was no ground for the fear, which had been the original reason for prohibition, that export, if permitted, might jeopardise the local food supply, seeing that the price realised by the sale of one picul of Native Rice would purchase twice that quantity of the Foreign product. And in deference to these representations, His Excellency, in August 1889, decided to legalise the export within certain limits. The amount that might be shipped through the Kowllon and Lappa offices was fixed at 500,000 piculs of Rice, or twice what weight of Paddy, a year. Such shipments were to pay a small tax(Rice, Tls.0.10, and Paddy, Tls.0.05, per picul), as a contribution towards the expenses of building two granaries, stocking them with grain, and of maintaining river embankments. The tax-paying grain was also allowed to frank one-fifth of its weight tax free. The collection on account of this tax, which is not included in the figures given above, was Tls.1,669 in 1889,  Tls.9,619 in 1890, and Tls.11,726 in 1891.

(d) OPIUM -- Merchants have consistently maintained that Native Opium is neither used nor known in this district. A seizure of six cakes of Yunnan drug, weighing 0.11piculs, recently made, has, however, elicited information to the affect that Native Opium is frequently smuggled from Canton  by river steamer, to be boiled down at the villages(Wanchai and Yinkeng or Ankang) on the Lappa shore and mixed with Foreign drug, the preparation being carried into the interior for sale. The value oft his Yunnan Opium is stated to range from Tls.200 to Tls.240 per picul. How much is brought into this province is not known, but that the amount is considerable is shown by the fact that while the Kwangtung Likin labels on all the six cakes seized are dated the same day, the numbers borne by them show a range of 64 between the highest and the lowest.

The import of Foreign Opium showed steady annual increase up to the end of 1890, but a sharp decline in 1891. The districts supplied through the several Customs establishments in this province overlap one another so much that a decline at one may well be balanced by  an increase at another. It will be interesting, therefore, the compare the quantity taken by each prefecture through this office with that taken through all Treaty ports and stations. This is shown in the following tables:_

    Amount Of Duty-Paid Foreign Opium Taken By Each Prefecture

                through Lappa,1888-91.

        Amount Of Duty-Paid Foreign Opium Taken By Each Prefecture

                         through Lappa, 1888-91.

Examination of these tables shows that imports into the eastern districts of the province are increasing; that those into the central districts are declining though the imports into them through this office are increasing. This is doubt less due to the more effective checks on smuggling introduced here year by year, though the smuggling from Macao, which is carried on in prepared drug alone, I believe, is estimated by the Native authorities to represent the equivalent of some 40 chests a month. The imports into the southern and western districts, both through this office and through all ports, show a marked decline. In three years the total decrease has amounted to 1,160 piculs or over 30 per cent. This is due to the receipt, in annually increasing quantities, of Opium from Singapore direct, which is landed at unfrequented ports, and so evades payment of Duty. If the decline continues at the present rate, in seven or eight years Duty-paid Opium will cease to be received in the districts mentioned, which would a loss to the Revenue, Imperial and provincial, so serious that steps should be immediately taken to put a stop to this illicit traffic. A suggestion as to what those steps should be is made in my Trade Report for 1891.

(e.) CURRENCY.-- The ordinary tael of commerce here is what is termed the chiu-chiu-pa-p’ing, or in other words. represents a Ss-ma-Png tael()of 0.998 weight, or 2 li short of the full value. A Mexican dollar is stated to very in value from chiu-chiu-pa-ping Tla.0.715 to Tls.0.30, or even Tls.0.735; but the average value is Tls.0.72, and in weighing broken dollars this latter is the rate taken, such silver being termed: “Foreign silver”(). The Ssu-ma-ping proper is only used by pawnbrokers, not in commercial transactions, Likin is nominally levied in Ss-ma-Png, but the weight exacted is somewhat higher the accepted standard of that silver, and thus Tls.100 Likin Ss-ma-Png are equivalent Tls.100.345 chiu-chiu-pa-png. The values of Haikwn silver, commercial silver, and of dollars, each in terms of the other two, may be thus stated:_

Hailkwan Tls.100   == Commercial Tls.112   == 155.56.

Commercial Tls.100 == Haikwan Tls.89.28571 == 138.89.

$ 100              == Haikwan Tls.64.28388 == Commercial Tls.72.

No quotations are available here from which to frame a table of the annual values of the Haikwan tael in English sterling, nor are there sufficient data to allow of a reliable statement of the annual value of that tael in copper cash. In 1882 one Haikwan tael is said to have represented 1,742 cash; in 1887, 1,680; and now, 1,587. The decline is partly due to the prohibition, said to have been enforced of late years, of the export of cash to Macao. At towns inland the Haikwan tael now exchanges for 1,610 cash. Dollar notes are, on an average, at a premium of about 4 per mil, the exchanges  being considerably above this figure during the first half of the year, and below during the latter half; it ranges at times from 18 premium to 10 discount. The purchasing power o the same weight of silver now and 10 years ago cannot be gauged, owing to many causes, but chiefly to increased taxation.

(f.) The values given in the statistics take no account of Duty and charges inwards, but include both Duty and charges outwards. The values called for under this heading stand, therefore, as given in the statistics, namely:__

    (g.) to(p.) *    *    *

(q.) NATIVE SHIPPING--Statistics of the tonnage employed in the carriage of merchandise passing this office are only available for the past two years. The junks so employed in 1890 numbered 24,251, with a capacity of 1,221,367 tons; and in  1891, 22,886, with a capacity of 1,235,643 tons. The table annexed shows the number of junks with cargo and in ballast, with their tonnage, which came from and went to each  place, and the passengers carried, during 1891; and the appended map shows the geographical position of the places named. These vessels, including those which ply between Macao and Hongkong, have carried cargo the estimated average value of which amounts annually to some $20,000,000. The freight earned represents in the case of voyages to neighbouring ports, about 1 per cent. ad valorem, and in the case of more distant ports somewhat more. The junks trading here earn, therefore, something over $200,000 a year. Details of the  rates charged on the more important commodities will be found in Appendices Nos.1 and 2.

             Shipping And Passenger Traffic1891

                                  From Foreign Countries

                Distribution Between Prefectures And Ports.

    To attempt to describe each class of these junks in impossible, two classes, however, should not be passed by without a few words__ the centre-board junk(which trades along the shallow coasts in the neighbourhood, and specially to Yeungkong), and that propelled by a wheel at the stern. The former carries in a central tank a wedge-shaped centre-board, which works on a pivot fixed in its smaller end ,and can be hoisted in shallow water or lowered in deeper water, being kept at the desired elevation by pegs passing through it. As regards the latter, it is but few years ago that the first junk propelled by a stern wheel, worked by foot, on the tread-mill or Chinese chain-pump system, made its appearance at Canton. Having been proved by actual experiment superior to the sailing junk both in economy of time and of working expenses, the stern wheel has gradually come to be fitted to most of the regular trading junks plying on the inland waterways; and such boats are now used everywhere, even up to Wu-chou-fu, in the Kwangsi province. Another recent departure has been the employment of launches to tow passenger-boats, by which are secured greater regularity in running and greater security against piratical attacks, When sanctioning this step in 1889 His Excellency Chagn Chih-Tung insisted on compliance with two conditions-- (1) Chinese ownership of the launch; (2) production by the applicant for a towing certificate of proof that he is the licensed oener of the boat to be towed. The object of these condition was, on the one hand, to safeguard China's control of her inland waterways, and on the other ,to secure a gradual and peaceful development in the use of steam power, by protecting the vested interests of the passage-boat owners and securing to them the advantages of the new order of things, instead of creating a rivalry between opposing interests, which could only result in trouble and the indefinite postponement of so beneficial a change. The proposed extension of the system to the seaboard encountered, unfortunately, strenuous opposition on the part of the Hoppo, and, in deference to his views, has been prohibited. On the inland waterways it is largely availed of ,and would be so more generally but for the heavy license fees charged ,which range from $1,500 to $3,300 a year. In spite of this, however, launches tow from here to Chantsun, Shikki, and Sanui; and from Canton to Taileung(Shuntak); Kowhong(Namboi); Shikki and Shilam (Heungshan); Shiklung (Tungkum); Hotong, Kongmun, Pakshek, and Kulao(Sanui); Sancheung and Chaolien(Sanning); Suitogki and Takitao (Hokshan); and to Chikhom, Tamsuihao, and Cheungsha(Hoiping).

The regulations under which the Native mercantile marine of this province plies were revised and codified during the Viceroyalty of His Excellency Jui Lin(1865-74), and it is very seldom that papers issued prior to that date are now seen, partly because junks do not last very many years and partly because the papers ought to be renewed regularly. A copy of one is ,however, given in Appendix NO.3.These revised regulations read thus: _" Whenever it is desired to build a trading or fishing junk for employment on the open sea, application to that effect must be made to the Magistrate of the district concerned-t’ing, chou, or hsien,and must be supported by a guarantee of good behaviour entered into by applicant's neighbours or by those having control of shipping in the locality. So soon as the vessel has been built, the name, age, and residence of the master, the names of the pilot, sailors, and other employees on board, the dimensions and capacity of the vessel, the number of masts she has the number of cannon and of small arms and the quantity of ammunition to be carried, shall be reported  to the Magistrate, and application made for ‘paper’(). In each district each batch of 10 vessels to which papers have been issued shallby an evident application to junks of the organisation ordinarily in force on shorebe enrolled as a ward(chia), and from the masters of these 10 vessels the most upright and reliable shall be appointed head of the ward. Should one of the 10 vessels commit piracy, all 10 shall be held equally responsible, unless the offender be denounced by one of the other nine. Each 10 wards will constitute and ao(),with a headman responsible for the behaviour of all the vessels in his ao. When the vessels granted papers in any district number less than 100 but over 150 two head-men are to be appointed. Trading vessels with one mast and those with two shall be separately registered, and classified under two distinct series of chia. In the case of fishing-boats, a chia will comprise 10 pairs. or 20 vessels. Papers must be renewed once every five years, Every vessel, whether trading or fishing, must, when leaving port, carry her papers with her, and produce them for inspection whenever called upon to do so by any Government vessel or station. Any vessel unable to produce her papers may be detained had handed over to the local authorities for punishment; and any vessel guilty of piracy is to be prosecuted with all the rigour of the law. It is forbidden to carry hand-grenades, or stink-pots()

The paper in use here consist to two kinds-one distinctly called ch’uan-chao(see Appendices Nos.4 and 5), the other in the form of an official reply to a petition(see Appendices Nos.3 and 6). An examination of these papers shows that at times the regulations given above are quoted in full; at others, a very short abridgment is given; at still others. no allusion is made to them. In some papers conditions not in the original rules are added-e.g., prohibitions to travel at night and to charge more than fair rates of freight or passage; limitations of the quantity of cargo and number of passengers carried, one passenger being allowed in place of one picul of cargo; and insistence on a renewal of papers if the boat be sold or her build changed. On the other hand, the rules have largely become a dead letter. There is now no fixed period for the renewal of papers. In some cases the limit is fixed at one year; in others, at five; in others again, at seven; and in still others no limit is mentioned; and where a limit is named, no steps appear to be taken to enforce it .Thus the papers of which Appendix No.3 is a copy, though dated in 1856, are still in use; as are those of which Appendix No.4 is a copy, though the limit has expired more than two years ago. The names of crew, etc., are now seldom given, nor is the route to be taken defined as it should be, it being merely stated instead that the vessel is allowed to go “to all sea ports ” or “to all river ports,” as the case may be. The papers, too, are frequently issued, not to a named boat, as required by the regulations, but to a named individual; and for a junk to carry her papers with her is certainly now the exception, not the rule. The reason for this is that is has become customary for papers to be taken out ,not by the junk-owner, but by some person of influence in the town, from whom the applicant, who, if in pecuniary straits, can give them as security for a loan. The Magistrate's fee for issuing papers varies, in those I have seen from Tls.0.20 up to Tls.1 per annum. The rent paid for papers appears to vary from Tls.25 to Tls.50 yearly, according to the days of the month on which the boat is authorised by them to ply.

In addition to the papers issued by the territorial authorities, trading vessels are required to take out an "arms certificate" from the Customs. This certificate, which permits the carriage of arms for self-protection alone, can be called for at any time and the entries in it and the arms carried compared; any excess discovered is liable to confiscation, but ammunition used may be made good, with the sanction of the authorities, after the reasons for its use have been reported(see Appendix No.7). To require junks to take out this certificate and to comply with its terms is a measure of considerable importance to the general interests. Permission to  import arms is readily granted by the authorities when the applicationis made by responsible persons. Without such official sanction, import is forbidden to Foreigners under the Treaties, and  to Chinese under provincial regulations, which, indeed, consider importation evidence of collusion with pirates, and punish such an act accordingly. Unless, therefore, strict control was kept over junks in this respect, they would be able to sell their armament inland and to replenish it on their return to Macao, with the result that the evil-disposed would be enabled to supply themselves freely with arms of precision. Inquiries instituted proved that this was being done. and, moreover, that not one-half of the junks trading here had any arms certificate. An order was therefore issued in June 1890 requiring these certificates to be taken out, and prescribing the quantity of arms etc., that might be carried. As the only object aimed at was the prevention of sale inland, there was no reason to stint the amount allowed:20 charges(i.e.20 catties ) of gunpowder for each cannon were permitted; and of rifles or muskets, one to each member of the crew and half as many again for passengers, with this district down to the date of this Report, Only 151 were already provided with certificates; the balance(195)have all been issued at Malowchow. The necessity for his regulation had been amply proved, especially during the  last few months, when junks were detected on several occasions disposing of their rifles and revolvers inland. Fines of double the value of the arms sold soon, however, put a  stop to such acts. Arms continue to be smuggled in large quantities into the interior by passengers, who pack among their luggage revolvers and Winchester rifles  with have been previously taken to pieces to facilitate hiding. It is impossible t search all such travellers, and the handsome profits gained prompt them to run many risks. In this way robbers pirates, and the unruly generally obtain arms, often of better quality than the Government troops have, with which to intimidate the law-abiding or to resist the authorities in their efforts to maintain order. That the government of his province is rendered far more difficult by this cause than it otherwise would be, no one can doubt. In this connexion I may be excused for quoting the principal part of Memorial to the Throne(see "Peking Gazette" of 3rd December 1889), in which the Governor General Chang Chih-Tung draws a graphic picture of the difficulties of coping with brigandage in this province. The object of the Memorial is to combat recent Peking decisions, which sanctioned merely ordinary rewards to officers instrumental in capturing pirates and highway robbers instead of such rewards as would be granted for conspicuous bravery in time of war, which the memorialist maintains were those merited under the regulations. To show the dangers to which officers on such duty are exposed. His Excellency continues thus:__

loot they may secure; these, at least, have a meeting-place which may be attacked-a refuge which may be captured. While in the case of the Hongkong and Macao pirates, if they wish to hire vessels, the Chinese authorities have no power to intervene; if they wish to purchase arms, the Chinese authorities have no power to prevent them; if they propose to act in concert, the Chinese authorities have no power to intercept them; while, favoured as they are by the extent of the open sea and the ramifications of the inland waterways, they are able, whenever a piratical attack is organised, to join their forces and mass their vessels into fleets. Their vessels are armed with formidable cannon, and on their persons they carry repeating rifles; and they will resist to the death the military or naval forces detailed to capture them. In these encounters, even if the pirates be taken, those in the van of the regular forces are always severely wounded and often killed, The suffering caused by these gangs to the law-abiding are heart-rending, for on shore they do not hesitate to kill the proprietor they are robbing, if he defends his own, or to fire the place or to carry off his children; and on the water they do not hesitate to kill or drown everyone on the boat they attack. Before forces can be concentrated to follow and capture them, they have already made good their escape to Hongkong and Macao, and to capture them in detail or to attack them in force is then alike impossible, In a word, relying on the security Hongkong and Macao afford them, the behaviour of these men differs in nothing from open rebellion against the Throne. Stringent orders have been repeatedly issued by the memorialist to the territorial officials, both civil and military, as well as to the preventive departments, that by the adoption of well-concerted plans, by the unstinted concentration of troops, and by the promise of liberal rewards for information, they strain every nerve to intercept and capture such desperadoes with the result that in the past few years so many refuges of the pirates have been razed that several hundreds of noted banditti have been captured and executed, and that piracy along the entire course of the East, West, and North Rivers, in the Limchow and Yamchow prefectures, and in the island of Hainan, has been almost entirely suppressed, and the inhabitants have been able to pursue their several calling without molestation. In districts where previously there were more than 100 serious cases of robbery or piracy in the course of the year, here are now certainly less than 10,and at times not even one. In fact, the measures taken have borne excellent fruit in every district in which complications resulting from neighbouring Foreign jurisdiction do not exist. But in the Kwangchow prefecture and along the littoral piracy has long been firmly established, and shows no sign of abatement up to the present.

Its desperate character is well known, from the detailed statements contained in the earlier dynastic histories and in the official reports to the Throne during the present dynasty. In the course of the year 1811 the then Governor General SUNG YUN(), had over 1,600 highway robbers and pirates executed ,and the state of the province was so serious that he  proposed a modification in the system of trial of such offenders. This proposal, which received Imperial sanction and was then incorporated in the regulations of the Board of Justice, provided that cases in which the offenders have been proved guilty of ordinary robbery on not more than one or two occasions, or in which the participants have not numbered as many as 40 and were not members of an organisation bound together by oath, shall continue to be reported  to the Throne for the determination of a penalty. But when the participants in the robbery exceed 40 in number; or, through not numbering 40, are bound together by oaths; or are guilty of wounding the owner defending his property, or in attempting a rescue, of wounding the police; or of pretending to be in official employ, in order to extort money; or of having been concerned in three or more cases of   robbery with violence; or when they are offenders who have succeeded in evading for two years or more  a sentence of capital punishment --in all such cases report to the Throne shall be dispensed with, and the offenders shall be executed there and then and their heads exposed as a warning.”"In any province but this it would be impossible, without causing consternation, to make so large a number of participants as 40 the standard of treatment ,or to designate as ordinary thieves those who had taken part in not more than two robberies with violence. The greater severity in the provisions of the law and the increased stringency in their execution have, however, entirely failed to strike fear into the hearts of the criminal class. they are bolder at the present day  than they were then. At that day it was a question only of the robbers wounding the owner; now, on frequent    occasions, they not only wound, but kill, Government troops. Then it was a question only of wounding the police while a rescue was being attempted; now when criminals have been arrested    their rendition is publicly demanded in official despatches by the Foreign authorities of    

their rendition is publicly demanded in official despatches by the Foreign authorities of      Hongkong.* Then participation in three years or more robberies, or evasion by flight of the penalties attaching to their crimes for or three years, were considered `circumstances aggravating their original offence’; now there are many prominent criminals who have taken part in over 100 piracies or highway robberies and who have escaped the meshes of the law for more than10 years. Then that such offenders were bound to one another by oaths was matter of mere repute; now it is a matter of well-known fact. Not only do the great majority of the criminals who find a refuge in Hongkong and Macao belong to the Triad Society(), but many belong to other similar organisations as well--the Lien-i T`ang (), the Lung-i T`ang(), the Lien-sheng T`ang(), and the I-sheng T`ang(), which is said to be an amalgamation of the Lien-i T`ang and the I-sheng T`ang. These details suffice to show how much more difficult to grapple with is the piracy of to-day as compared with that of 1811.

*    Probably refers to a demand that a Chinese arrested in British Kowloon by the Chinese authorities should be releases and sent back to Hongkong.

"Subsequently, in 1860, the Governor General MAO HUNG-PIN()and the Governor KUO SUNG-TAO() presented a joint Memorial to the Throne requesting that when the capture of noted pirates or of the organisers of robbery on a large scale was effected, those instrumental in the capture might be accorded exceptional honours, just as though they had distinguished themselves in time of war, and the captured be subjected to all the penalties laid down in the regulations above quoted. The Board supported the request, and it received Imperial sanction. There are certain statements in this joint Memorial to which the present memorialist desires to invite attention as still particularly appropriate to the Kwangtung province. One is that ‘rebellion having in many instances originated in piracy or highway robberies, each upright official who brings such offenders to justice is thus a powerful aid in nipping disorder in the bud.’ The other is , ‘to suppress the piracy and highway robbery which now prevail, leniency and a policy of laisser aller must be put aside; severity and promptness in striking are essential.’ The condition of things with reference to Hongkong and Macao has, however, greatly changed since those words were written, and the difficulties of dealing with  such cases greatly increased. The bribery of Foreign police to which whey resort ,and the retention ,at the expense of liberal fees, of Foreign lawyers to which they resort, and the retention ,at the expense of liberal fees, of Foreign lawyers to defend them materially assist these desperadoes in frustrating the efforts of the Native officials to arrest them. Their daring has consequently increased, while fewer have been brought to justice. Seeing, then, that robbery with violence is more rife in Kwangtung than in any other province, and that the authorised penalties are more severe there than elsewhere, to insist that the rewards for capturing these exceptionally  desperate characters shall be but those granted on ordinary occasions seems to memorialist an inability to adjust the balance of merit aright. The Board's representations are no doubt based upon the view that the capture of desperate characters is not a matter of national concern, but merely one of the ordinary duties of the police and military, and is therefore not entitled to the rewards granted for bravery in war. Yet such a view shows a want of appreciation of the condition of this province. For here, when the Government troops come into conflict with these bands of robbers the  ground is shaken with the shock of arms; if they attempt to surround the band, or on the raising of an alarm start in pursuit, they are resisted with a hail of bullets under which the foremost meet their death on the spot, and few indeed will be captured, unless the military forces are drafted in large bodies and they are prepared to engage the robbers a l’outrance -even then, if captures are made, the captures are bought at the cost of many wounded and killed. In truth, such expeditions differ in nothing from open warfare, and are in marked contrast with the steps necessary to arrest offenders in other provinces .for in  them armed resistance to the constituted authorities is the rare exception, not the rule, and gives occasion for little disquietude."

This Memorial has been taken strong exception to in some quarters, as aiming to show that piracy is more rampant on the coast now than it was some 50 or 60 years ago. Such criticism is unjust. The Governor General was far too conversant with the history of the province to venture such a statement. What he says is that the measures taken by him have to a large extent suppressed piracy and robbery inland, but that the Foreign status of Hongkong and Macao has enormously increased the difficulties of dealing with those crimes on the seaboard. Is the contrary to fact? No one acquainted with the history of those two ports will deny that the large inducements offered for the smuggling of opium and salt, and the impunity with which large armed bands were allowed to organise within their limits for the invasion of the neighbouring districts of China, combined to make both places the head-quarters of a very desperate class. The piracy of the s.s Namoa, in December 1890, was planned in Macao with a skill and forethought which command admiration, and with a knowledge of the movements  of passengers and of the routine on board the steamer so accurate in its details as to show perfect organisation, and was executed by an armed band which took passage at Hongkong. Similar outrages were contemplated by desperadoes who shipped from the same place and in the same way. The local press stated that there were at the time over 2,000 known pirates or highway robbers in Honkong, and to diminish this source of danger the Governor exercised his legal power to order the deportation of desperate characters without trial. Most of these men were undoubtedly malefactors escaped from China. The unrestricted sale of arms in Hongkong and Macao, moreover, increases the difficulties of the Chinese authorities, not only in suppressing piracy on the coast, but in maintaining order in the interior. Junk-masters and passengers are enabled to supply themselves with ease with arms and ammunition, and as the profits to the derived from their sale in land are considerable, they have every inducement to do  so. In this way, despite the most stringent preventive measures, the disorderly in China provide themselves with the mean of oppressing the law-abiding, of robbing the wealthy, and of resisting the lawful authorities. Such a condition of things is a constant menace to the peace and well being of this province, and should not be allowed to continue. In consequence of the outbreak of troubles in the North, the export of arms and ammunition without special permission was prohibited by the Governors of both Hongkong and Macao in October last for a period of six months. This temporary prohibition should be made permanent. Such a step would be but an act of justice to China, and would tend to the peace and well-being not only of the mainland but of Hongkong all Macao as well.

(r.)to(y.)      * * * * * * * * *

(z)FUTURE PROSPECTS OF TRADE--The volume of trade passing these stations, though of course largely affected by the conditions-climatic and financial-of the neighbouring districts on the mainland, is practically measured by the degree of prosperity enjoyed by Macao as a commercial centre; and the future prospects of that trade depend in the main upon whether the influences affecting Macao tend towards the expansion or restriction of its commerce. There can, I fear, be no doubt that their tendency, at present at least, is towards the latter. The greater wealth and constantly increasing commercial importance of Hongkong cannot fail to make that port each year a more serious rival of Macao and to withdraw trade from Lappa to Kowloon. In the past, several causes have tended to obscure the effect of this competition and, to a certain extent, to neutralise it; but as they pass away its serious character gradually froces itself into view. As Hongkong advanced year by year into importance. the effect on Macao of the rivalry of that rising port was veiled by the lucrative coolie traffic carried on from Macao; by the contraband trade in opium, which, though shared by Hongkong, continued, as it had before the cession of that island, to make Macao its centre; by the fact that, owing chiefly to the Hoppo's procedure, Macao became the head-quarters of the west coast trade;and bythe enormous profits derived by Macao from the establishment of the lotteries on the result of the Chinese literary and military examinations known as the "Weising". These sources of gain have one after the other been swept away. In 1875,after an existence of a quarter of a century, during which time enormous fortunes had been amassed from the 500,000 Chinese estimated to have been sent from Macao beyond the seas, the infamous coolie traffic was finally extinguished. In 1876 the opening of Kiungchow followed, a year later, by the opening of Pakhoi, as Treaty ports, dealt a serious blow to the virtual monopoly previously enjoyed by Macao of the west coast traffic, and by substituting the safe and rapid steamer for the slow and unwieldy junk, transferred a considerable portion of that trade to Hogkong. In 1885 Macao's monopoly of the Weising lottery was put an end to. Though fully sensible of the serious harm, moral and financial, worked by this from of gambling to the people of this province, China had through long years steadfastly set her face, as one of the principles of her government, against any compromise with legalised gambling, whether as a source of revenue or not ,and had summarily cashiered the Governor General YING HAN when, in 1874, he sanctioned the establishment of the lottery at Canton. Experience during the following 10 years showed beyond doubt, however, that so long as the head-quarters of the lottery continued in Macao(that is ,in the province itself),prohibitions no matter how strict and a preventive service no matter how numerous were insufficient no prevent the surreptitious introduction of tickets in great numbers ,and that to allow things to continue as they then were meant simply the constant drain of money from Kwangtung into Macao. In 1885,therefore,a reluctant consent was given to the establishment of the lottery in China, with the result that the sum the monopolist in Macao was willing to pay the Portuguese treasury for is privileges at once fell from $353,000to $360,000 a year. In 1887 a heavy blow was dealt to smuggling by the Convention between China and Portugal which led to the establishment of his office; and how large an interest the smuggling of opium from Macao was may be gathered from the fact that the Harbour Master, in his report upon the trade of that port for the year 1822 (published  in the "Boletin da Provincia" of 5th December 1884), estimated the value of the crude opium reshipped to China at $3,579,029, consisting of declared shipments valued at $1,633,952(presumably by junk, but of which much, certainly, was smuggled),and secret shipments valued at $1,963,077 (representing, presumably, what was smuggled in small boats and by armed gangs overland). This Convention tended undoubtedly to the well-being of the community, by eliminating from it a most unruly and turbulent class who had derived a livelihood by systematically breaking the laws of China. On the other hand. the closing of many sources of large profit which resulted from the occurrences above mentioned, coupled with the gradual extinction of the tea trade before the competition of Indian and Geylon leaf, has diminished the wealth of Macao, and consequently its purchasing powers, Several other causes, resulting from the system of government followed there, have, however, aided to lower the position of Macao as a commercial entrepot. The heavy tonnage dues, amounting as they do to some $0.06 a ton, compared with $0.02 1/2 at Hongkong, have driven steamers from Macao to Hongkong. Increasing taxes produce the same result. At present the capital of Macao cannot bear comparison with that of Hongkong; and as the natural tendency of trade is to gravitate to the most important centre, it will inevitable abandon Macao for Hongkong, unless the smaller cost of living and of warehouse charges gives the former an appreciable advantage over the latter. Macao has decidedly enjoyed this advantage in the past, but is now rapidly losing it, as, to meet the ever-increasing demands from Portugal, caused by her financial position, new, imposts are being constantly introduced. Objection to the terms of the new farm of salt fish in 1886, and the imposition of a tax on fishing-boats in 1887, drove the chief traders in this commodity from Macao to Chinese territory. The acquisition of Tonkin by France has deprived Macao of the trade which formerly existed with that country, and it is now centred in Hongkong, steamers  having taken the place of junks. The pork farm, which permits the monopolist to levy a tax of Tls.0.08 on each pig brought to Macao by junk and a commission of 3.30 per cent. on the sales effected by consignees, has practically deprived Macao junks of the trade in this live-stock, which is now carried to Honkong from the four lower prefectures by steamer. A cause, however, which probably contributes more than any of those already enumerated to the decadence of Macao as a centre of commerce is the rapid silting of the approaches to the port, due to the large amount of detritus carried down by the waters of the Pearl and West Rivers, between the mouths of which Macao is situated. Repeated appeals have been made to the home Government by the Macao authorities for permission to employ the funds in hand for dredging purposes; but ,so far, without success. The evil, however, is rapidly increasing and must be dealt with in the immediate future, if Macao is to remain a port at all. Already Chinese merchants aver that, owing to the annually decreasing depth of water in the outer anchorage ,the trade formerly enjoyed by Macao with the Ch’ao- chou prefecture and in the import of Foreign rice for all the districts west Macao  has been diverted to Hongkong. Finally, Native traders maintain that the absence of banks which would advance on a junk's cargo so soon as she reaches port militates strongly against Macao's trade. On the other hand ,at Kongmun such facilities already exist. There, so soon as a junk arrives, banks are ready to make advances against the cargo, which enable the consignees to expedite the vessel's discharge and to at once purchase return cargo; with the result that a larger number of voyages can be made in the year and capital turned over more frequently. In consequence, a larger portion of the west coast trade tends each year to abandon Macao in favour of Kongmum. Macao's future prospect is, therefore, not just now a bright one. First and foremost ,if Macao is to remain a port of any importance whatever, it is necessary that Portugal wake up from her present lethargy of indifference ,and permit her Colony to undertake the dredging of the approaches to the port. The next most important step would appear to be the establishment of a bonded warehouse, in which goods could be placed on arrival under the charge of responsible persons so that the banks might be induced to make on them the advances necessary to expedite the movement of shipping. When the measures to be take to give effect to the Convention signed by Portugal with China were under discussion, it was arranged to establish a public warehouse, one portion of which was to be appropriated to the storage of opium intended for reshipment to China, and was to be under the control of the Chinese Customs. For some reason effect was never given to this arrangement, possibly from apprehension on the part of Portugal that the presence of Chinese revenue officers in Macao might injure her national prestige. Seeing, however, that China had just formally recognised by Treaty Portugal's sovereignty over Macao, such a feeling ,if it existed, seems uncalled for. An arrangement such as that contemplated is, moreover, one which has existed in many countries ,and exists at present in the case of at least the United States and Canada; and while it both  promotes commercial convenience and safeguards the revenue interests of the nations concerned, it has in no way injured their political status. A nation sure of its position and confident of its rights need have no apprehension on such a score. Indeed. when Hongkong was ceded by China to Great Britain, the latter country went much farther, and not only saw no objection to the levy of Duty by Chinese Custom House officers in Hongkong, but was willing to consider tat as a condition of the cession of the island. lord Palmerston in his instructions of 31st May 1841,for the guidance of Sir Henry Pottinger, the negotiator of the Commercial Treaty ,expressed himself on this subject as follows;_

"It is understood that the Chinese Government has consented to cede the island of Hongkong to Great Britain; and that island is supposed to be in many respects well qualified to become commercial station of some importance for our trade with China.

Her Majesty's Government have reason to suppose that HongKong has been ceded with the condition that British and other Foreign merchandise imported into HongKong should there pay to Chinese Custom House officers the usual and established Import Duties which such goods would pay on being imported into China, and that such Duties having been so paid, and the merchandise being duly stamped by the Chinese Custom House officers at HongKong, there should be full liberty to all persons to carry such merchandise away to any port in China, without is being liable to any further payment, in such ports or elsewhere, on account of Import Duty.

"Such an arrangement would no doubt be anomalous. as far as it involved the presence of Chinese Custom House Officers and the collection of Chinese Customs Dues in a possession of the British Grown; and, moreover, there might be some difficulty in practically carrying into execution that part of the arrangement which would exempt such goods from any subsequent payment in Chinese port. But there are similar instances in Europe of Duties collected in the territory of one Power by the agents of another Power. The Transit Duties which shipping and goods going up the Scheldt are liable to pay to the Dutch Government are collected, not at Flushing, but at Antwerp, by a Dutch agent stationed in that Belgian town; the Duties which the Hanoverian  Governmaent levies upon shipping and goods passing by the fort of Stade in their way up the Elbe are levied, not at Stade or Brunshausen ,but by a Hanoverian agent in the city of Hamburg; and a plan has for some time past been under discussion between Denmark and other Powers, by which, if it were adopted, the tolls which Denmark is entitled to levy upon ships and merchandise passing the Sound would be levied, not at Elsinore, but in the several Prussian, Russian, and other ports  in the Baltic, by Danish agents stationed at those ports for such purpose.

"It is possible that British commerce might be much encouraged if goods which had once been landed at Hongkong could be carried from thence to any Chinese ports without being liable for any further payment on account of Duty; and the Chinese Custom House officers in Hongkong would be less likely than the Chinese authorities at other ports to attempt to levy exorbitant and illegal Duties.”

There being, then, nothing derogatory to the political status of Portugal in the arrangement contemplated, the true interests of Macao would have been best consulted, it would seem, rather by the extension of that arrangement to all goods than by the abandonment of it; for in the Agreement supplementary to the Treaty, signed at Peking in December 1887, it is  agreed that "Chinese produce which has paid Customs Duties and Liking Tax before entering Macao may be re-exported from Macao to Chinese ports without paying Customs Duties and Likin Tax again, and will be subject to the payment of only the tax named Hsiao-hao." The difficulties, however, in the way of giving effect to this stipulation are under present circumstances practically insuperable; for all the Chinese produce of any value, food products apart, which enters Macao is there sorted and repacked, with the result that its appearance has been so changed by the time it passes the stations inwards that it is impossible to identify it with any similar produce which passed outwards. It has been argued that as Macao produces nothing, all the Chinese produce reshipped thence to China must have passed outwards and paid Likin, and that, therefore, justice would practically be done by exempting all such produce  going inwards, no matter whether it can be identified or not. The statements so made are only correct in part. For though Macao, it is true itself produces nothing. large quantities of Chinese produce are brought over from Hongkong both by steamers and junks; and this  produce has not paid Likin before entering Macao. To exempt all merchandise of Native origin going in wards would, therefore, on the one hand, tend to destroy the junk trade, by offering a premium to the shipment of all Native produce by steamers from the Treaty ports to Hongkong and Macao; and ,on the other entail heavy loss to the provincial treasury. Were there, however, a public warehouse in Macao, under the joint control of the Chinese Customs, for the storage of junk-carried cargo, repackage could be effected under Customs supervision, and a certificate of identity issued when the cargo was reshipped, which would secure it exemption from Likin when passing the stations. In this way effect could be given without difficulty to the stipulation above quoted and the necessary means provided to obtain from the banks the advances merchants express themselves so anxious for. Further, the aggregate of these advances would probably soon recognise the advisability of establishing a branch in Macao; and as it would be content with a lower rate of interest than is demanded by Native banks doing similar business at kongmun and elsewhere, the advantages Macao would enjoy as a commercial centre would be yet further increased.

    ALFRED E HIPPISLEY

Commissiner of Customs.  CUSTOM HOUSE,LAPPA,  31st December 1891.

    APPENDICES

    APPENDIX NO.1. FREIGHT CHARGED BETWEEN MACAO AND HONGKONG.

APPENDIX NO.2. (a)PATES OF FREIGHT BY JUNKS from MACAO TO PORTS NAMED

               (b)RATES OF FREIGHT BY JUNKS TO MACAO FROM PORTS NAMED.

               (c)PASSAGE RATES AND TIME OCCUPIED IN JOURNEY BETWEEN MACAO

                  AND NEICHBOURING PORTS.

APPENDIX NO.3.  JUNK’S "PAPERS".

APPENDIX NO.4   JUNKS PAPERS.

APPENDIX NO.5   JUNK’S PAPERS

APPENDIX NO.6JUNK’SPAPERS.

APPENDIX NO.7   JUNK’SARMS CERTIFICATE

  All for copy! 

No.3.

No.4

No.5

No.6

(No.7)

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