IV. CREATION OF THE FOREIGN CUSTOMS.
The provisional system—British and American ships pay full dues—Other nations enter and clear free—Americans follow the same course—Alcock's strict views of neutrality—Danger of infringing it by establishment of Government officials within the foreign colony—Breakdown of the provisional system—Alcock calls upon the Imperial Government—Custom-house re-established by the Taotai Wu—Reappearance of all abuses—Alcock's remonstrances—Antecedents of Wu—He makes private arrangements and admits vessels free of dues—Alcock allows British ships to do likewise—Shanghai thus becomes a free port—Alcock's efforts to meet the difficulty—First idea of the foreign customs—Conditions of success—Conference with the Taotai—Delegates appointed—New custom-house inaugurated July 12, 1854—Mr H. N. Lay appointed Inspector-General—Conditions and essential features which caused immediate and permanent success of the foreign customs.
The "provisional system," as it was called, worked smoothly for four months, but not equally, for while British and American ships paid full duties (in conditional promissory notes), those of other nationalities, having mercantile consuls, were entered and cleared exempt from all duty. One Prussian, one Hamburg, two Siamese, one Austrian, three Danish, and two Spanish—in all ten vessels—were so cleared between September and January, which was, of course, a serious injustice to the competing merchants on whose ventures full duties were levied. In vain might the British consul argue that the cargoes of these defaulting ships bore no larger a proportion to the whole trade than in normal conditions the smugglers would bear to the honest traders. The American consul, sympathising with the latter, notified on January 20, 1854, his secession from the provisional compact, to which decision he gave immediate effect by allowing two vessels, the Oneida and Science, to depart without payment or security of any kind. It was impossible after this for the British authorities to continue to lay a burden on their nationals from which competitors were thus freeing themselves, the more especially as on broader considerations their collecting duties at all for the Chinese had been, three years previously, pronounced inexpedient by the British Government. However commendable, therefore, on political and moral grounds, and however convenient as a stop-gap, the provisional system was doomed. The next move was by some means or other to procure the re-establishment of a legal Chinese custom-house.
This would have been done at an earlier period but for the strict views held by Mr Alcock on the question of neutrality between the belligerents. The soil of the foreign settlement had been declared sacred and neutral. To permit any Chinese authority to use it even for fiscal purposes seemed a violation of its neutrality. Besides, native officials exercising their functions there would have had either to protect themselves by military force, however small, or to be protected by the foreigners, in either case compromising the neutrality of the settlement. When the Chinese officials proposed as an alternative to discharge customs functions afloat in the river, the same objections presented themselves. The foreigners must in that case also have defended the revenue collectors from attack by the rebels. The customs authority therefore remained dormant.
But on the breakdown of the provisional system whereby the three treaty consuls acted as trustees for the Chinese Government, there was no alternative left between making Shanghai absolutely a free port and setting up some sort of native custom-house. As the lesser evil—to say no more—Mr Alcock chose the latter, and within three weeks of the lapse of the provisional system he had "called upon the imperial authorities to re-establish a custom-house in some convenient locality," offering at the same time to afford them the necessary facilities for working it. The custom-house was, in fact, re-established by the Taotai Wu on February 9, when the provisional system of collecting duties, a system never favoured by the British Government, was finally and officially terminated.
The reinstatement of the custom-house under the superintendency of the Taotai Wu was the signal for the prompt reappearance of all the worst irregularities in an exaggerated form.
The admonitions that official received from Mr Alcock on his treaty rights and on the necessity for strictness and impartial accuracy were completely thrown away. The Taotai had been formerly a merchant in Canton, under the name Samqua; and whether it was the passion for a "deal" inspired by early training, or the corruption of good manners by subsequent association with official life, or, as is most likely, a double dose of both, without the checks appropriate to either, he, the superintendent of customs, fell at once to making private bargains with individual merchants. By arrangement with him a Bremen ship, the Aristides, was allowed to enter and clear without complying with a single customs or port regulation or the payment of any dues, save what may have been paid to Wu himself by way of douceur. Two American ships and one British were dealt with in similar fashion. These facts being brought to the notice of Mr Alcock, he called the Taotai to account, and on receiving only subterfuges instead of explanation, he thenceforth allowed openly to British ships the same privileges that the Chinese authorities had voluntarily, though secretly, conferred on those who chose to make corrupt bargains with them. That is to say, Shanghai became now—from April 1854—absolutely a free port.
At last, then, there was a real tabula rasa inviting a fresh experiment; and Mr Alcock immediately applied his mind to devising some new expedient to meet the difficulty. The Chinese superintendent, however willing to compound to his own advantage for the customs dues, was as little pleased with its complete abolition as the foreign authorities themselves, and he had made sundry alternative proposals, based on his experience at Canton, for the effective collection of duties. It seemed, however, that in the hands of such a facile official, or any one likely to succeed him, his remedies against smuggling were worse than the disease, and the necessity of a new departure began seriously to occupy the minds of the treaty consuls. The outcome was a novel scheme, which was mooted in a despatch to Sir John Bowring, dated May 1, 1854, in which Consul Alcock, while recognising that "the attempt will not be unaccompanied by serious difficulties," declared that he "did not relinquish all hope of success if the collection of duties can in any way be brought under the effective control of the three treaty Powers as to the executive of the custom-house administration."
"On any other basis," he added, "I believe every effort to benefit the Chinese revenue and at the same time protect the honest merchant must in the nature of things prove nugatory." The idea took further shape in a memorandum of suggestions drawn up by Mr Alcock on 15th June, when he stated that "the sole issue out of the difficulties by which the whole subject is beset under existing treaties is to be sought in the combination of a foreign element of probity and vigilance with Chinese authority."
He adds as the first condition of success the "free concurrence of the Chinese authorities" in any scheme which may be concocted, and then proposes "the association with the Chinese executive of a responsible and trustworthy foreign inspector of customs as the delegate of the three treaty Powers, to be appointed by the consuls and Taotai conjointly at a liberal salary." This is put down at $6000 per annum, the whole foreign staff to cost $12,000, and various details of administration follow.
It argues well for the absence of international jealousy in those days that Mr Alcock proposed that a French gentleman of the name of Smith, in the French consular service, should be the inspector whom he and the American consul agreed to recommend to the Taotai. In a despatch to M. Edan on the 27th of June 1854 he solicited his official sanction to the appointment.
The next step was a conference where the three treaty consuls—Alcock, Murphy, and Edan—received the Taotai, who discussed with them and then adopted substantially, though with some modifications, the "suggestions" above quoted.
Instead of one delegate from the three consuls, it was decided that each was to appoint one, the three delegates then forming a "board of inspectors with a single and united action." As many questions of national and international jurisdiction were likely to arise out of the executive functions of the inspectors, provision was made for dealing with them, and as far as human ingenuity could foresee without any experience to guide, every contingency, down to the minutiæ of internal administration, was considered in the instructions given to the inspectors. The announcement of the newly-constituted Customs Board was formally made by the consuls on July 6, and the new custom-house was inaugurated on the 12th, the three inspectors being Mr T. F. Wade, British; Mr Lewis Carr, American; and M. Smith, French.
The new custom-house was an immediate success: it fulfilled every purpose for which it was created, yielding its full revenue to the Chinese Government, and putting an end to the temptations of traders to seek illicit advantages over each other. It says much for the soundness of the principles on which it was established that not only has the custom-house of 1854 survived the shock of rebellion and war, of extended treaties, of the multiplication of trading-ports from five to thirty and of treaty Powers from three to thirteen, but its roots have struck deep and its branches have spread wide over every portion of the empire, and that in spite of the opposition of powerful provincial officials, whose revenues it curtailed by diverting them into the imperial channel. The triumvirate Board under which the institution was launched was little more than nominal, the direction of the customs being a one-man power from the outset, one only of the three inspectors possessing either the knowledge, capacity, or zeal needed to infuse life into the new department.
The first English inspector, who was only lent for a time to start the new enterprise, was replaced in a few months by Mr H. N. Lay, interpreter to the consulate, who definitively retired from the British in order to enter the Chinese service, while Mr Wade returned to his vice-consular duties. The functions of the Board of Inspectors were soon consolidated in the office of Inspector-General, which was conferred upon Mr Lay, and held by him until 1863, when he was obliged to resign the service of the Chinese Government in consequence of their failure to ratify his engagements in connection with the Osborn flotilla.
It only remains to mention in this place that coincident with the establishment of the maritime customs in Shanghai came the instructions from her Majesty's Government to cancel the promissory notes, amounting to a million of dollars, which had been given by the British merchants for duties during the interregnum, the conditions attached rendering them legally invalid.
Although the organisation of the foreign customs was an expedient to meet an emergency never likely to recur, the transaction, nevertheless, forms a brief epitome of the ideal foreign relations with China, and it is useful therefore to note what were its essential features and the conditions of its creation.
First. The Chinese Government were reduced to helplessness and were amenable to advice.
Second. Corruption and laxity were inherent in their nature and ineradicable except by external force.
Third. The external force, to be savingly applied, must not be subversive of Chinese authority, but must supply the element in administration in which the natives are absolutely wanting, and which is so tersely summarised by Mr Alcock as "vigilance and probity."
Fourth. This combination of Chinese authority with foreign vigilance and probity, which has rendered the Chinese customs service a kind of miracle of reform, was capable of renovating the whole Chinese administration. Why it has not been extended into the other departments of state is only another form of lament over lost opportunities.
Fifth. That the system was established on the broadest cosmopolitan basis.