"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.