China: Its History, Arts, and Literature/Volume 2/Chapter 3
Chapter III
FINANCE
LIKE all Chinese matters involving reference to statistics, facts about the national revenue and expenditure are difficult to obtain. Great variations appear in the statements of European writers who undertook to discuss the subject between the sixteenth and the nineteenth centuries. The earliest estimate, that of a French missionary—Père Trigault, writing in 1587—put the Central Government's income at twenty millions of taels, or about eight millions sterling, taking the tael at its then value of eight shillings, approximately; and sixty-eight years later, another authority computed the figure to be five and a half times as large. Then, after a short interval, there appeared estimates the lowest of which was five millions sterling, and the highest (Barrow's in 1796), forty-nine millions. On the whole, however, the consensus was that the revenue actually reaching Peking aggregated from twelve to fifteen millions sterling annually, and that the revenues collected for local purposes totalled about thirty-five millions.
A word must be said here about the manner of expressing these figures. The use of a sterling unit appears convenient at first sight, and certainly does not involve any inaccuracy prior to the appreciation of gold in the nineteenth century. Thus, speaking of revenues or expenditures in bimetallic eras, it is arithmetically a matter of indifference whether sums be expressed in silver taels[1] or in the latter's then unvarying gold equivalent. But after the demonetisation of silver and its consequent débâcle, which took place in the second half of the nineteenth century, the choice of an unit demands closer consideration. Gold has, of course, Such have been the the advantage of stability. fluctuations in the sterling value of silver that the tael has fallen from nearly eight shillings to less than three shillings, and a revenue of twenty million taels, which in 1800 represented eight millions sterling, now represents only three millions. Nevertheless to reduce all Chinese figures to a gold basis would be misleading, unless it could be shown that the prices of commodities in terms of silver had risen in China pari passu with the fall in the white metal's gold price. That has not been the case, however. China having always been a silver monometallic country, the silver price of labour, which is the true foundation of such calculations, has not appreciated proportionately to the silver price of gold. Indeed, China's virtual insensibility to the economic phenomena. of Europe and America bears striking witness to her seclusion. Hence, although the perpetual use of a silver unit introduces a fictitious element into financial statements, recourse to a gold unit would not be less unsatisfactory from some points of view, and, on the whole, the advantage seems to be on the side of adhering throughout to the white metal.
There is no such thing published in China as an annual budget showing the estimated revenue and expenditure for the whole Empire. It may be doubted, indeed, whether anything of the kind is compiled, for in financial matters as well as in administrative each province is virtually independent. Naturally the Board of Revenue in Peking might be expected to discharge the function of preparing a budget as an essential part of the duty of general supervision. It does not do so, however. It confines itself to estimating each year what will be the needs of the imperial Treasury during the next twelvemonth, and it divides that amount among the provinces proportionately to their financial capacities, so that each knows exactly what sum it has to send to the capital. Evidently, in order that the Board's manner of apportioning the provincial burdens may be just, it must obtain information about the condition of the provinces. Such information is furnished by the viceroys or governors, as the case may be, and although the Board has competence to verify their reports by dispatching inspectors to examine
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frank about the conditions in their districts, unless there is a tale of financial difficulty to be told, when they neglect no facts calculated to create an impression of impecuniosity.
The provinces have discharged all their duties towards the Central Government when the sums demanded by the latter are sent forward. Thereafter the amount of provincial collections or disbursements is practically unqueried. Theoretically all local expenditures have to be approved by the Board of Revenue in Peking. But the Board having no means of intelligently auditing the accounts submitted to it, passes them as a matter of course. Thus each province virtually enjoys financial autonomy.
As to the manner of collecting the revenue, the only part of the work directly undertaken by agents of the Central Government is that relating to the foreign maritime customs and a few of the old native custom-houses. The rest is all done by agents of the provincial governments to whom the collectors are responsible. Moreover, all
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Peking.
There being no budget nor any settled accounts, whether for the Empire at large or for each province as a whole, it is impossible to ascertain whether a surplus exists in either case. Prior to the Taeping rebellion, or, at any rate, up to the end of the eighteenth century, there is reason to think that whereas the annual state income amounted to some forty million taels, the disbursements did not exceed thirty millions in normal times, so that a constant surplus accrued, and an accumulated reserve of sixty or seventy million taels was generally in hand. Foreign intercourse had not then begun to lay its burdens upon the country, nor had western civilization forced the nation to spend a large part of its income upon instruments for destroying life. But it may be safely asserted that neither in central nor in local treasury is there any surplus now. On the contrary, the close of each year sees some demands unsatisfied and, if not carried forward to the next year, doomed to remain unsatisfied. It is presumed that if a province fail to send up the full amount of its assessed quota to Peking, the responsible viceroy or governor is punished. But a plausible excuse is generally accepted, and the Board of Revenue in the capital, taught by long experience, takes care that its de-
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Street Scene in Shanghai.
The chief source of revenue is a tax upon land. There is reason to think that this tax produces a smaller income now than it did in former days, but nothing can be confidently asserted on that point. Various official publications furnish information which would be more credible were it less contradictory; but no two of them agree, and the most explicit knowledge deducible from their figures is that during the first half of the nineteenth century the land tax yielded from twenty-nine to thirty-three million taels yearly, whereas now it yields only twenty-five millions. The diminution appears to be attributable to the Taeping and Mohammedan rebellions which, in the middle of the century, laid waste large tracts of land and thus reduced the tax-paying area. Probably these ravages no longer constitute a genuine excuse for exemption, so far as the actual tax-payers are concerned; but they do furnish a plausible pretext for the tax-collectors' failure to satisfy the demands of the central treasury. Peking has no means of accurately checking the provincial returns, and the local officials, whatever be the amount really coming in their. hands, take care to preserve in the mind of the Central Government unfavourable notions as to the people's taxable capacity. It may sound incredible, but it is nevertheless true, that even the rate at which the land is assessed for the purposes of this tax is not clearly known. Foreigners who have enjoyed excellent opportunities of judging, allege that 0.75 tael per acre fairly represents the average tax on good rice land. Now even if one-third of that figure be taken as the general average for all arable land, good and bad included,—in other words, if the assessment be only sevenpence per acre,—the tax should yield a hundred million taels (the area of land under cultivation being 400 millions of acres approximately), whereas the total collection is only one-fourth of that amount.[2]
Out of this land-tax revenue of twenty-five million taels, about eight and a half millions go direct to Peking for the uses of the Central Government, namely, three and a half millions in coin and five millions in kind. Here, however, it must be repeated with increased emphasis that the sum sent to Peking, even when it is collected in coin and forwarded in coin, does not by any means represent the total taken from the people. What the local authorities do is to take not the actual amount requisitioned by Peking, but that amount plus all expenses of collecting, all charges for transmission, and all fees and perquisites sanctioned by custom. To illustrate what is involved in this, Mr. George Jamieson, sometime British Consul-General in Shanghai, and one of the best authorities on such subjects, mentions a case of a junk chartered by a foreigner which, on passing a barrier, was required to pay seven and a half taels by way of toll and to accept a receipt for only four, the legal charge. Remonstrances and investigations elicited the fact that what the barrier officials had to exact was not four taels,.but such a sum as would enable them to lay down four taels of the standard weight and purity in Peking, and consequently they were obliged to include in the amount every contingent expense of whatsoever nature. "That," says Mr. Jamieson, "illustrates exactly what is going on all over the Empire. To every tael or picul of rice legally leviable there is added a number of petty charges of the above nature, - meltage fee, allowance for.waste, clerk's fees, etc., - till the sum is doubled or.more. But there is another and greater mischief, and that is the vicious plan of making every.magistrate and every collector a farmer of the revenue. All district magistrates receive about the same salaries and. allowances, but everybody knows there is all the difference in the world between one incumbency and another. Each district has a fixed quota which the magistrate.must produce by hook or by crook, but beyond that minimum all the rest is practically his own, not to keep exactly, because if he holds a lucrative.appointment he is expected to be extra-liberal in his presents to the governor, the literary chan- cellor, the provincial judge, the treasurer, and so on, not to mention still higher dignitaries, if he wishes to get on. But there is no magistracy that does not at least make up its limits of taxation and leave something over, while the greater number leave a handsome surplus. To hand this over to the imperial exchequer is about the last thing that any one would think of doing. It is the fund out of which mainly the fortunes of viceroys and commissioners have been built up." Speaking broadly, it seems safe to assert that for every tael shown in the returns as revenue from land tax, at least as much remains in the hands of the provincial officials, or is expended on account of various charges and fees. In other words, the people pay land tax aggregating fifty million taels, out of which twenty-five millions appear in the revenue returns.
The above remarks are specially applicable to the grain which has to be forwarded annually to Peking for the support of the Manchu population. This rice is not paid in kind by the farmers, as might reasonably be supposed. Uniformity of quality, an important consideration, would not be attainable were that method adopted. What happens is that the people are required to pay a monetary commutation (in copper or silver) calculated on the basis of the market price of the grain together with an ample allowance on account of costs of transport and miscellaneous fees, just as has been shown to be the practice with regard to the ordinary land tax collected in money. This commuted amount varies from twice to three times the actual market value of the rice. Having received the money, the district magistrate (chih-hien), who is the responsible tax-collector, either purchases the required quantity of rice in the market at the best rate obtainable—often clearing a large profit on the transaction—and forwards it to the general depot whence it is ultimately sent north by the transport department; or he makes an arrangement with that department to buy the rice in consideration of the receipt of a lump sum. Ultimately the transport department—which is an important branch of the Government, maintaining a large number of officials and employes—becomes responsible for the delivery of the grain in Peking. It is estimated that the total sum collected from the people on account of this grain tax of five million taels is eleven and a half million; that is to say, six and a half millions remain in the hands of local officials and the transport department, while five millions go to Peking. Of course these five millions are included in the twenty-five millions that represent the total collected as land tax.
After the land tax the salt gabelle is one of the most important sources of revenue. The sale of salt in the eighteen provinces and Manchuria is a government monopoly, and has been so ever since the seventh century before Christ, when Kwan Chung, premier of the state of Ts'i (now Shantung), who had already given proof of shrewdness by devising "a kind of lupanar where trading visitors from neighbouring states were encouraged by Babylonian women' to leave their gains behind them," conceived the idea of official monopolies of salt and iron, based upon an average annual minimum consumption per individual of thirty pounds of salt, and upon the. indispensability of ploughshares, axes, pans, knives, and needles.” This statesman's estimate of average consumption of salt per head is not borne out by modern calculations, which put the figure at about eight pounds instead of thirty, but his financial acumen is attested by the fact that the monopoly has been maintained ever since his time now twenty-five centuries ago. The Empire is divided for purposes of salt administra- tion into seven main circuits,[3] each of which has its own source of production and is strictly de-limited, the salt in one circuit not being allowed to be sold or transported into another. In dis- tricts along the coast the method of production is from sea-water by evaporation and boiling, but in Szchuan and Shansi the salt is obtained from brine found in wells and marshes. In Szchuan alone there are about eight thousand of these artesian wells in existence, only though some five thousand of them are worked. The industry was organised in 1132 A. D., and from the wells, which are very deep, not only brine is obtained, but also unlimited quantities of hydrogen gas, which serves as fuel for treating the salt and is also distributed like coal gas in long pipes. "In wandering over the provinces of Szchuan, Kwei-chou, and Hupeh," says Mr. E. H. Parker, "I had good opportunities for studying the working of this wonderful industry. In many places the salt, especially when of the hard kind like blocks of stone, is practically small money, and its retail value varies unerringly so many fractions of a farthing per pound according to the freight rates of boats in demand and the number of miles coolies have to walk. A lost traveller could almost grope his way about the country by simply asking the retail price at each village and the next one in any direction. The waste of fuel, of human and beast labour, of time and of patience is of course gigantic, but it might have serious effects upon the popular economy of the province were machinery suddenly introduced, carriage cheapened, and strict honesty incontinently in- sisted on." No limitations are imposed on the quantity of salt produced in any of the circuits, nor is the mode of production prescribed. The one inflexible rule is that every grain produced must be sold either to government officials who have depots for storage purposes, or to salt-merchants who have purchased warrants conferring the right to supply certain areas of consumption. The cost of production varies greatly. In some places, where simple processes of evaporation are available, the expenditure does not exceed four- pence per cwt.; in others, where boiling has to be resorted to, nineteen-pence is spent in getting the same quantity. The retail price is, of course, very much higher, being nearly four shillings per cwt. in the seacoast districts—as Fuhkien and Che-kiang—whereas it is nine shillings and six- pence in Szchuan, Anhwei, Kiangsu, etc. Officials of the salt department purchase the salt direct from the producers and sell it to the merchants at a price such as will cover all costs and charges together with the duty. Subsequently it pays likin, or transit tax, but that need not occupy attention. "Distribution is undertaken by the salt merchants, a body of men holding warrants from the salt commissioner, a viceroy, or governor. The quantity of salt which ought to pass into consumption annually in each circuit is roughly estimated, and enough warrants issued to cover that amount, so that each warrant is supposed to be used every year. The warrants are perpetual; that is to say, a warrant once issued may be used over and over again, may be handed down from father to son, or may be transferred to a nominee for value. The possession of one or two salt warrants thus becomes in some places a valuable asset. In Anhui and Kiangsu, for instance, they are now worth some twelve thousand taels each. These warrants entitle the holder to buy at the government stores a specified amount of salt, which he may then convey to any part of the circuit. But he must not sell direct to the consumer. Having purchased at an officially fixed price, so he must sell through an agent of the salt government, which fixes the selling price also. The merchant, having chosen the place where he wishes his salt to be disposed of, must enter it at a sort of bonded warehouse, which is established in every town of importance, under the charge of a deputy appointed by the salt commissioner of the circuit. The salt is stored there under the control of the deputy to await its term for sale. For this purpose the merchants' names are entered in a book in order of application, and the salt is strictly disposed of in the same order. The warrants are handed in at the same time, and are retained by the deputy till the salt they cover is all cleared, when they are handed back, and the merchant is at liberty to try a new venture. Each warrant thus follows the other in order of rotation, and the only advantage one merchant can gain over another is in choice of locality for disposing of his salt. The object of every one, of course, is to get the salt into circulation quickly. The sooner it is sold, the sooner does he get his money and his warrant back, and the sooner he is ready to apply for a new issue. If he can use his warrant once in a year or once in nine months, his profits are naturally double what they would be if he could only use it once in two years or eighteen months." The number of warrants in circulation is seldom increased by the issue of new ones. Thus to obtain a share in the business, the only resource is to buy a warrant from some one already in possession. In good times and when the warrants can be used rapidly, the warrant-holder realises a profit of from twenty to twenty-five per cent.
The yield of the salt gabelle, including the transit tax levied on the commodity, is estimated by the most recent authorities at 13½ million taels approximately. But it seems probable that this figure, like the land tax, does not by any means represent the total actually collected. Even from the one item of transit dues (likin) a much greater return than 13½ million taels must be obtained. For since the consumption of salt throughout the Empire is estimated at 25 millions of piculs (1 picul=113½ lbs.) and the transit duty—in some of the chief circuits, at any rate—is 1.13 taels per picul, the revenue from likin alone should be 28 million taels. Mr. Consul-General Jamieson further alleges that the squeezes paid by a warrant holder to the officials are 0.40 taels per picul, which means an aggregate of 10 million taels on 25 million piculs, and thus likin and squeezes give a total of 38¼ million taels, to which the Government's profits on the monopoly have to be added. Thus, as is usual in dealing with Chinese revenue returns, bewilderment results from any attempt to form accurate ideas.
No form of Chinese impost has inspired so much discussion in the Occident as likin. The term literally signifies "millage;" that is to say, so many parts out of a thousand.[4] Likin is certainly not one of the ancient institutions of China, though there are some evidences that a cognate tax was imposed in old times. It is generally regarded as an impost of modern origin, having been first levied in 1852, when, owing to the great expenditures incurred in dealing with the Taeping rebellion, and owing to the reduced yield of land tax caused by the rebels' devastations, it became necessary to devise some new source of income. The then governor of Shantung, Li Hwei, seems to have conceived the idea of likin (or litôu, as he called it), but an organisation capable of collecting it profitably was not devised until 1854. That organisation consisted of a central bureau and several subordinate stations at all the large towns and at points along the main routes, whether by land or by water. The number of these stations depends upon the amount of trade in the district. Along the lower parts of the Grand Canal the stations are about twenty miles apart, but elsewhere they are not so numerous. Goods passing any of these stations have to pay a per-millage of their value, and if they have several stations they pay several times, until the payments aggregate a certain maximum. It will thus be seen that likin is, in fact, transit duty. There is a tariff of charges, but it receives little attention. What happens in practice is that the owner of the merchandise strikes the best bargain he can effect with the officials of the station, supplementing the agreement with a douceur (called "tea-money"). Regular traders, or guilds of traders, often commute for a lump sum which covers a whole voyage or a whole season. Apparently - it is necessary to avoid positive assertions, for the Chinese withhold all definite information-apparently goods have to pay alternately three and two per cent at successive barriers until four are passed, by which time ten per cent has been defrayed, and thereafter free passage is granted for the rest of the province. But if the goods are transported into another province, the exactions begin again. In actual practice, however, things are not so bad as these figures indicate. Merchants save themselves by bargaining. The likin stations will often underbid each other to secure business, and where more than one route is available owners of goods obtain easier terms. A hundred bales or piculs are thus passed as eighty, sixty, or, it may be, fifty. Nevertheless the tax is a grievous check to business, and there is evidence that the Chinese authorities originally imposed it reluctantly. They called it an "unfortunate necessity," and they warned the local officials not to allow any " undue harassing" of traders.[5] In such an obnoxious light is likin viewed by foreign merchants engaged in Chinese commerce that they often speak of it as an illegal "squeeze" exacted by the local official for his own profit. Illegal, however, it certainly is not, for it has the sanction of imperial decrees, though a more inexpedient impost in the interests of trade could scarcely be conceived. Whether it can be called illegal when imposed on goods imported from abroad by foreign merchants, or on Chinese produce or manufactures destined for export by foreign merchants, is a point more difficult to decide conclusively. The earliest treaty (that of Nanking in 1842) provided that after British merchandise had " once paid the regulated customs and dues " at any of the open ports " such merchandise might be conveyed by hinese merchants to any province or city in the interior of the Empire of China on paying a further amount as transit duty which should not exceed 2*^ per cent on the tariff value of such goods." It cannot be reasonably doubted that the intention of the framers of the treaty was to exempt British merchandise from all additional dues on its way into the interior of the country. Subsequently the provision was made still clearer by the second treaty (that of Tientsin in 1858), where not only the case of imports but also that of exports was disposed of, and it was added that " no further duty " should be levied on merchandise which had received a transi certificate. But likin did not exist in 1842; it was first imposed in 1853. Therefore the question assumed this form: Was likin a tax of such a nature as to be included in the "further duties" against which certified merchandise was guaranteed by the treaty? The Chinese authorities appear to have been inclined originally to answer in the affirmative. They could not hide from themselves that, in spite of its name, likin was nothing more or less than a transit duty, and therefore not properly leviable upon goods which had obtained a certificate. The records go to show that they hesitated for some time to impose it, and that they could probably have been deterred permanently had the Treaty Powers offered resolute resistance. But that is just what the Treaty Powers did not do. There were found British officials in high places who contended that as the establishment of an imperial customs system under foreign supervision—which was one of the innovations consequent upon foreign intercourse—materially interfered with the development of native customs collectorates and thus deprived the local officials of an important source of revenue, Chinese expedients to provide compensatory income ought not to be vetoed. The British Government itself, too, adopted a view favourable to China. It read the treaties as providing that foreign produce might be placed at any specified place in the interior of the country for purposes of equal competition with similar Chinese produce, on payment of a transit duty of 2½ per cent in addition to the import duty, but that there was no provision to prevent the Chinese authorities from imposing on foreign and Chinese goods alike whatever general municipal taxes were leviable upon the latter. In short, the British Government regarded likin as a municipal tax, and therefore excluded it from the scope of the treaties so long as it did not constitute a discrimination against foreign goods in favour of native. Other Western Powers declined to endorse that benevolent interpretation of the treaties, and the great majority of the foreign merchants doing business with China refused to endorse it, their views being partially influenced by a conviction, founded on practical experience, that the development of Chinese commerce, whether domestic or foreign, was fatally checked by the likin system. On the other hand they were equally convinced that to abolish likin was beyond the strength of the Chinese Government, and that no promise obtained from Peking in that sense could be implemented in the face of provincial opposition. There were solid reasons to be sceptical. For when, in deference to untiring pressure and remonstrance from the foreign representatives, transit certificates, as provided by the treaties, began to have practical efficacy, the Chinese local officials quickly showed themselves equal to the occasion by reviving an impost called loti shui, which signifies either a grower's tax or a terminal tax, and is levied upon goods either before their transit has commenced or after it has terminated, thus hitting both exports and imports. The convenient fiction is that since the transit certificate gives exemption against transit dues only, it cannot cover goods before or after transit. Confronted by such manœuvres the foreign merchant feels persuaded that Chinese local officials would always find a means of evading any engagement made by the Central Government for the abolition of likin, and that the Central Government has no power to impose its will upon them. It must be confessed, however, that this distrust existed long before the loti-shui object lesson. It existed in 1869 and it existed in 1876. It showed itself then in the form of an inveterate objection to any treaty stipulation commuting transit dues for a fixed increase of customs duties, and it shows itself equally to-day by refusing to endorse the following proposal, formulated by British commissioners for revising the commercial treaty and endorsed by the chief local officials of China—the viceroys and the governors:—
To abolish throughout the Chinese Empire all internal taxation of whatsoever kind or description, whether imperial, provincial, local, or municipal, on merchandise and products, whether native or foreign, whether for import, export, or for consumption within the Empire, and the Chinese Government engages that all offices and stations of every kind and description for the levying of taxation on merchandise, except the Imperial Maritime Customs and land-frontier Custom Houses, shall be permanently abolished.
In return for which wholesale reform, a reform of incalculable benefit to China's commerce, the British Government would sanction the addition of ten per cent to the customs duties, the proceeds (19 million taels approximately) to go to the Chinese local officials, provided that such additional duty would at once cease to be leviable should the stipulated abolition be not strictly adhered to in spirit as well as in letter. It is possible that before this volume sees the light the above sweeping change may become an accomplished fact, for assuredly such a project ought not to be wrecked on a rock of vague distrust. In 1885 an analogous arrangement was made on a small scale. It was agreed that foreign opium—which had never been included in the transit-pass system—should be exempted from likin in consideration of a commuted payment of 80 taels per picul at the port of entry. Amid universal scepticism as to its probable validity that agreement was faithfully implemented by the Chinese, and the fact ought to weigh with the doubters to-day, especially since the proposed arrangement is guaranteed by a radical reservation. But the truth is that Chinese Officialdom has acquired a bad international reputation, not altogether deservedly perhaps, and the average treaty-port resident views with profound suspicion any compact which depends upon Chinese good faith for its fulfilment.
It is estimated that the collection of likin throughout the Chinese Empire aggregates 13 million taels annually. But from what has been said above the certainty will be at once apparent that a great discrepancy exists between the sum shown in the official returns and the sum actually collected by officials.
The foreign trade of China contributes a large amount to the State's income, and this appears to be the sole item of revenue that flows into the imperial Exchequer without leakage en route. Originally the latter statement could not have been made it became true only from the time when the business of collecting the customs duties was entrusted to foreigners. That arrangement had its beginnings, not in any deliberate choice on the part of the Chinese authorities, but in circumstances over which they exercised no control; namely, the occupation of the native city of Shanghai by the Taeping rebels (1853-1855). During the resulting interval of disturbance the task of collecting the duties was temporarily entrusted to three foreign officials deputed at first by the consuls of England, France, and America, and appointed subsequently by the Viceroy at Nanking, who held the post of Imperial Commissioner for Foreign Trade. Things remained thus until the conclusion of the Tientsin Treaty in 1858, the operations of the foreign collectorate being confined to the single port of Shanghai. But at that date, the Chinese Government having contracted new liability for war indemnities, and having agreed to pay them out of the customs duties, the machinery for collecting the latter acquired special interest in foreign eyes, and its maintenance became a matter of international concern. Further, the Tientsin Treaty contained provisions for an uniform system of duty collection at all the open ports, thus facilitating the organization of a customs service under the direct control of the Central Government and the latter, taught by the success that had marked the operations of the foreign collectorate in Shanghai, placed the new service under a foreign inspector-general with a foreign commissioner at each port and a large staff of foreign employés. As for the work subsequently done by this customs service, it will be enough to quote here the appreciation of a recent writer:[6] "For the first time in history a true account was rendered to the Imperial Government, accompanied by a substantial revenue on which it could depend. Naturally the agency, though foreign, which yielded such tangible fruit, commended itself to the statesmen of the capital, who frankly recognized, as did the provincial authorities themselves, that the result obtained was wholly beyond the competence of any native organization.'
It would be incorrect, however, to conclude that the service was altogether organized by the Peking Government, for the actual work of collecting was done by ordinary provincial officials, the function of the foreign commissioner being to see that the duties were paid and receipts given before vessels cleared. The collectors being members of the Provincial Government, "made their returns, not direct to Peking, but to the governor or viceroy of the province where the port was situated, who in turn reported to the Board of Revenue in the same way as he reported any ordinary branch of his receipts. Conversely, all orders as to apportionment or paying out the money came first to the governor, who again passed them on to the customs treasurer." So that in theory the customs revenue of a port might be classed as part of the revenue of the province in which it was situated. Practically, however, the governors never looked upon the customs revenue as falling within their control, and although a considerable portion did come in aid of certain provincial expenditures, it was by virtue of the specific authority of the Board of Revenue (in Peking) and not as a right. Formerly the general method of dealing with the customs revenue was that four-tenths were appropriated direct by the Peking Government and the remainder devoted to various purposes, as the support of foreign legations, the expenditures of the Naval Board, the lighting and defence of the coasts, etc. But practically the whole collection is now required for the service of the foreign debt. It amounts to 23 millions of taels, approximately, and it will be increased to about 26 millions when arrangements, already in progress, have been completed for raising the general tariff rate on imports to an effective five per cent.
Another source of revenue is the native customs. The foreign maritime customs, described above, take cognisance of cargoes carried in ships of foreign build only,—whether foreign-owned or Chinese,—the vast quantities of goods transported by junks being under the control of native custom-houses, situated at many places on the coast and in inland waters. Some of the richest of these collectorates are given by the Court in Peking to Manchu nominees, but with the exception of Canton all are managed through the local authorities and all render their returns in the usual way. The total sum thus collected is officially shown as four million taels annually. Obviously that amount represents only a fraction of the actual revenue. Considering the immense area of China and the vast fleet of junks plying on her littoral and inland waters, it is an idle jest to pretend that the customs duties paid by them aggregate only four million taels. Speaking of Shanghai in this context, Mr. Consul-General Jamieson says: "It needs but a glance at the forest of masts that line the banks of the river to show that the native junk traffic is still of very considerable proportions. Many of the boats, too, are of large size, carrying eight thousand to ten thousand piculs (say five hundred to six hundred tons dead weight). They bring cargoes of native produce from Newchwang, Shantung, and Foochow, and although they do not make many trips during the year, the aggregate of their cargoes must be very great. To say that the total duties for the year only amounts to 33,000 taels is altogether too ridiculous. Such a sum must represent more nearly a week's collection than a year's." In truth, there can be no doubt that, like all other constituents of the national revenue which are under Chinese control, the nominal yield of the native customs is only a small fraction of what it would be were the administration honest.
It has been already noted that in 1885 a treaty between Great Britain and China provided that foreign opium, in addition to import duty of 30 taels per picul, should thenceforth pay, at the port of entry, a sum of 80 taels per picul in commuta- tion of all subsequent charges in the shape of likin, etc. The proceeds of these imposts, aggregating between six and seven million taels annually, were ultimately assigned to meet the requirements of the Admiralty Board in Peking. Simultaneously with the introduction of the above system, orders were issued to the provincial authorities that the duties and likin on native opium should be shown in a special return and should not be used for provincial purposes. Wide areas in China are devoted to the cultivation of the poppy. In 1881 a competent observer estimated that theproduction of opium in the southwestern parts of the Empire amounted to 224,000 piculs, which, were it taxed in the same ad valorem proportion as foreign opium, say 60 taels per picul against 110 taels for the foreign drug, - would produce a revenue of over 13 million taels, whereas the sum officially reported is only one million. If to this be added the production in other parts of the Empire and it should be observed that the cultivation of the poppy is steadily spreading - the estimate is that a total revenue of at least from 15 to 18 million taels would be obtained. Yet the official figure is only 24 millions. Here, too, the leakage is evidently very great.
There are minor sources of revenue, which may be classed as miscellaneous, - for example, land-transfer fees (three per cent on the value of the land), pawnbrokers' fees, trade licenses, etc., - and there are items of extraordinary revenue, such as sales of titles and official ranks which operations sometimes produce as much as from three to four million taels annually - and subscriptions or benevolences which wealthy men are occasionally required to pay on occasions of national emergency. This extraordinary income must evidently be excluded from any normal estimate, and having excluded it the proceeds of the various sources enumerated above take the following form:———
| Million Taels. | |
|---|---|
| Land Tax | 25 |
| Grain Tax | 7½ |
| Salt Gabelle | 13½ |
| Likin | 13 |
| Foreign Maritime Customs | 26 |
| Native Customs | 4 |
| Subsidies from special provinces | 9 |
| Duty and likin on native opium | 2¾ |
| Miscellaneous | 5 |
| Total | 105¾ |
Enough has already been said as to the elasticity of the above figures, supposing that the administration were placed on what in the Occident would be termed an honest basis. India, for example, pays a land tax of 100 million taels and a salt tax of 33 millions, or a total of 133 millions, against a corresponding figure of 45 millions in China. The general likin item, again, were commutation effected on the basis of an additional ten per cent to the customs tariff, would be changed from 13 to 19 millions; the native customs ought to yield easily 8 millions instead of 4, and the duty and likin on domestic opium should be at least 15 millions in lieu of 2¾; so that from these three sources the return should be 42 millions, not 19¾. Altogether there is no difficulty in supposing that China's revenue might over 200 million taels instead of 105 millions. Japan with her population of 42 millions and her arable area of only 13 millions of acres, pays without any difficulty a sum of 140 millions of taels annually to the State, exclusive of local taxes, whereas China, with a population of 420 millions and an arable area of 400 million acres, pays only 106 million taels inclusive of local taxes.
Turning now to expenditures, it is to be noted, in the first place, that out of a total nominal collection of 105¾ million taels, only 19½ millions go to Peking to pay the outlays on account of metropolitan administration, Manchu garrisons, and the Imperial Household. The singular conservatism of the Government is shown by the fact that no modification is ever effected in the costly and clumsy system followed when transmitting money from the provinces to the capital. Whether in specie or in bills, the money has to be accompanied all the way to Peking by two expectant officials, and the consequence is that the expense of transmission amounts to from one to two per cent of the total. Speaking generally, very little trustworthy information is obtainable about state expenditures in China. The following account used to be accepted as fairly accurate, but, as will presently be shown, it requires modifications:—
| Taels. | |
|---|---|
| Peking Government (including support of Manchu garrisons and Imperial Household) | 19½ millions. |
| Defense of Manchuria | 1¾ millions.„ |
| Defense of Central Asia and Kansuh province | 4¾ millions.„ |
| Aids (administrative and military) to the three southwestern provinces, Kwangsi, Kweichow, and Yunnan | 1½ millions.„ |
| Customs Administration | 2½ millions.„ |
| Provincial expenditures (administrative and military) | 36¼ millions.„ |
| 66¼ millions. |
Out of the difference—39½ million taels—between this total and the aggregate revenue of 105¾ millions, a sum of 10 millions ought to be equally divided between the Naval Board in Peking and the Southern Naval Squadron; a sum of 8 millions, allotted for forts, guns, coast defence, and foreign-drilled troops, and a sum of 2 millions for public works (including the Yellow River embankment, etc.). But such appropriations have now to be reduced in the face of the indebtedness contracted by China on account of various loans floated abroad to pay for public works or to discharge the indemnity exacted by Japan in 1895. Of these loans ten were contracted between 1887 and 1898, their total amount being 61½ million pounds sterling[7] in round numbers, and the whole will be paid off, according to the present programme, by the year 1949. In addition to these debts she became liable for an indemnity of 450 million taels to the various Powers with whom she fought—or, to speak more accurately, who fought with her—in the sequel of the Boxer uprising of 1900, so that the annual charges upon her revenue on account of the service of her foreign loans and her latest indemnity are altogether 41 million taels, approximately. It has been a matter of some perplexity to find means of defraying such a sum, but the task has been achieved by diverting to the central treasury moneys previously appropriated to defray local expenditures—notably the proceeds of the salt gabelle and the native customs—and inasmuch as the provincial officials are adopting measures to compensate this loss by fresh exactions, a sense of keen dissatisfaction is growing throughout the country.
This necessarily imperfect statement of Chinese finance may be supplemented by a quotation from Mr. E. H. Parker's "China":―
Things would not be so very bad, in spite of parlous times, if all the receipts were paid, in one currency, into one central chest or account (as the foreign customs are); and if all payments were drawn in one currency from this one chest and remitted in one way. But, in the first place, all provinces have two main currencies of pure silver (several "touches") and copper cash (several qualities), the relation between which differs in each town every day. Besides this each province has its own "touch" and "weight" of a silver ounce; and some provinces use dollars chopped and unchopped, by weight and by piece, as well as pure silver; and the dollar exchange varies daily locally and centrally in regard to both copper cash and silver. Even this difficulty, which involves an enormous waste of time and energy, and opens the door to innumerable and inscrutable "squeezes," might be philosophically ignored if receipts and disbursements were lumped in one account,—if the venous blood were allowed a free course to the heart, and the arterial blood a clean run back to the extremities. But the Board of Revenue, which is as corrupt and conservative as the provinces, goes about its business in a very hand-to-mouth, rough-and-tumble sort of way. . . . Then each viceroy or governor disputes every new demand, and it is quite understood that some appropriations are intended to be more serious than others. Some simpleton of an honest man from time to time throws everything out of gear by allowing a truth to escape: the Board never lets a "flat" of this sort score in fact, even though he appear to do so in principle. A governor cannot be expected to show zeal for Yunnan copper when he knows that the high officer in special charge is making a fortune out of it. . . . There are other absurd results of this rule-of-thumb system. Province A receives subsidies from province B, but itself, owing others to province C, pays B on behalf of C. Thus there are two freights to pay and two losses on exchange. Sometimes A may be directed even to pay a subsidy to a province B which already pays one to province A. Funds which might easily be sent by draft are usually despatched in hollowed-out logs of wood, with a guard of soldiers as escort, accompanied by carts, fighting "bullies," and a commissioned officer. Even when sent by draft, there is a charge of two or three per cent for remitting, and a commissioned officer is sent to carry the draft. It is pathetic to read the account of hundreds of coolies trotting all the way to Shanghai from Shansi with heavy logs of wood containing silver wherewith to repay the interest on European loans. The extraordinary care and punctuality exacted in matters of form, duty, or national honour are only equalled by the shameless peculation and callow waste of time and money which prevail in personal matters connected with the performance of the same public duty. Officers of high rank, who are known to make thirty thousand or forty thousand taels a year out of their posts, gravely work out their balances to the thousand-millionth part of an ounce, forgetting that (even if the clerk's salary were only sixpence a day) the time occupied in counting and subtracting each line of figures would cover, ten thousand times over, the clerk's salary rate per minute. In a word, the whole Chinese financial system is rotten to the core, childish and incompetent, and should be swept away root and branch. Until there is a fixed currency, an European accountancy in all departments, and a system of definite sufficient salaries, all reform is hopeless to look for.
- ↑ See Appendix, note 10.
- ↑ See Appendix, note 11.
Note 11.—In the neighbouring Empire of Japan, where only 13 millions of acres are under cultivation, the land tax yields 40 million yen in round figures. At the same rate—which, so far from being onerous, is admittedly very light—the sum collected in China would be 1,200 million yen, or about 1,000 million taels.
- ↑ See Appendix, note 12.
- ↑ See Appendix, note 13.
- ↑ See Appendix, note 14.
Note 14.—The Peking Gazette of January 18th, 1875, said: "Likin is in its nature an oppressive institution, only continued in force owing to the necessity of providing resources to meet the army expenditures in the northwest."
- ↑ See Appendix, note 15.
- ↑ See Appendix, note 16.
Note 12.—Much of the information here given is abbreviated from a brochure by Mr. Consul-General Jamieson.
Note 10.—The term "tael" is derived from the Hindu "tota" through the Malayan "tahil." It signifies an ounce weight of pure silver, and is not a coin.
Note 13.—Mr. H. A. Giles says that it is derived from li, the thousandth part of a tael, which is nominally one cash, and kin (metal, here used for money). He adds: "A tax, originally of one cash per tael on all sales, voluntarily imposed on themselves by the people, among whom it was at first very popular, with a view of making up the deficiency in the land tax of China, caused by the Taeping and Nienfei troubles.
Note 15.—Mr. A. Michie in "The Englishman in China."
Note 16.—As the loans were contracted in gold (with one exception) and are redeemable in gold, they are here stated in sterling.