ing this request, the Chinese Government entertained no desire to interfere with the present administration of the maritime customs, which was generally considered to be efficient and satisfactory, nor to interfere with the devotion of the funds of the maritime customs to the liquidation of foreign loans secured thereon. What he had uppermost in mind in asking for the recognition of China's tariff autonomy was the right to fix and differentiate the tariff rates. As 1 the establishment of such a new régime would require time, it should come into force only after a period to be agreed upon. Before that period, a maximum rate should be agreed to, and within that maximum rate China should enjoy full freedom of differentiating rates, for example between luxuries and necessaries. But negotiation for the purpose of fixing a maximum rate might take months, and as the present Chinese financial condition needed. some immediate relief, it was proposed that on and from January 1, 1922, the Chinese import tariff should be raised to 12 per cent, a rate mentioned in the Chinese treaties with Great Britain, the United States, and Japan.

Discussion. Mr. Root stated that the treaty of 1903 between the United States and China contained a provision concerning the abolition of likin and proceeded to read Article IV of the treaty as follows:

The Chinese Government, recognizing that the existing system of levying dues on goods in transit, and especially the system of taxation known as likin, impedes the free circulation of commodities to the general injury of trade, hereby undertakes to abandon the levy of likin and all other transit dues throughout the Empire and to abolish the offices, stations, and barriers maintained. for their collection and not to establish other offices for levying dues on goods in transit. It is clearly understood that after the offices, stations, and barriers for taxing goods in transit have been abolished no attempt shall be made to re-establish them in any form or under any pretext whatsoever.

Continuing, Mr. Root stated that the treaties of 1902 and 1903 between China and Great Britain and

Japan, respectively, contained provisions of similar effect, and that the increase in customs duties to 121 per cent, as proposed in those treaties, was clearly intended as a consideration for the abolition of likin, and inquired of Mr. Koo what proposal, if any, he was ready to make with regard to "likin."

Mr. Koo answering said that likin was a handicap to the internal, as well as the external trade of China, and that the substantial classes in China favored its abolition. He added that the Government would be prepared to abolish likin if tariff autonomy were granted, and if it were possible to agree on an increase in customs duties, which would compensate for its abolition. He considered the original proposition of an increase to 12 per cent as hardly sufficient today, in view of the great increase in public expenses.

Senator Underwood called attention to the fact that stable conditions in China would be for the benefit of all those nations who did business with China and that such conditions were desirable. Pointing out that it was recognized as axiomatic that no government can function effectively without revenue, he said that the committee, in working to secure ample revenue for China, was laying the cornerstone for stabilization in that country. He remarked that he did not consider the transportation tax as a tax on imports and added that the United States had had a similar tax. Continuing, Senator Underwood pointed out the necessity of refraining, as far as possible, from disturbing existing trade conditions: readjustment and revision should be made with a view to avoiding any disturbance of established channels of

trade. It seemed advisable, in view of the efficiency of the present system of administration, that it should not be disturbed. In his opinion no arbitrary rates, such as 12 per cent, should be decided upon, but rather such changes should be made as to assure a revenue sufficient to keep China out of debt. It was important that every cent collected should go to meet the expenses of government. He added that Mr. Koo's suggestion that China should have the right to charge more duty on luxuries than on necessities was a reasonable one, but argued that a simple and not a complicated tariff was desired. Finally, the needs of the Government should be clearly known and the customs levies changed to meet them.

Sub-Committee Discussions. The matter of Tariff Autonomy for China having thus been presented and discussed in general terms by the Committee, it was decided that, for its further and detailed consideration, a sub-committee' should be appointed.

Six meetings of this sub-committee were held.

At the first meeting, held November 29, Dr. Koo presented the following specific proposals on behalf of China:

1. The present import duty of 5 per cent shall be forthwith increased to 12 per cent.

2. China agrees to abolish likin on January 1, 1924, and the Powers agree to put in force on the same day the levy of certain

'Upon this sub-committee the following were appointed by the Chairman of the Committee: Senator Underwood (Chairman) for the United States; Baron de Cartier, with M. Cattier as alternate, for Belgium; Sir Robert Borden, with Sir John Jordan as alternate, for the British Empire; Dr. Koo, for China; M. Serraut, for France; Senator Albertini, with Signor Fileti as alternate, for Italy; M. Hanihara, for Japan; Jonkheer Beelaerts van Blokland, for the Netherlands; Captain Vasconcellos, for Portugal.

surtaxes on import and export duties provided for in the Treaty of 1902 with Great Britain and in that of 1903 with the United States and that of 1903 with Japan; and the Powers further agree to the levy of an additional surtax to be put in force on the same day for articles of luxury over and above the import tariff rate of 12 effective. In all other respects, the undertakings of China and the Powers herein stipulated are to be carried out in accordance with the terms of the Treaties above mentioned.

3. Within five years from the date of agreement, a new customs régime shall be negotiated and concluded by treaty on the basis of a maximum rate of 25 per cent ad valorem for any article imported into China, within which rate China is to be free to regulate and arrange the import tariff schedule. This new régime is to be in force until the end of the period referred to in paragraph 5 below.

4. The reductions now applicable to the customs duty collected on goods imported into and exported from China by land shall be abolished.

5. The treaty provisions between China and the Powers by which the levy of customs duties, transit dues and other imposts is regulated shall be abrogated at the end of 10 years from date of agreement.

6. China voluntarily declares that she is not contemplating to effect any fundamental changes in the present system of customs administration, or to disturb the devotion of the customs revenue to the services of the foreign loans secured thereon.

In support of the propositions which he had presented, Dr. Koo called attention to the fact that the significance to China of a competency upon her part to control her import customs rates was peculiarly great since Chinese industries were as yet largely undeveloped, that Chinese communities were still largely agricultural in character, and that, therefore, China, for a considerable time, could not depend to any considerable extent upon sources of revenue other than maritime customs. Also, he pointed out

that the facts should not be overlooked that already a large portion of her present receipts from impost duties was pledged for the payment of the interest upon foreign loans and that the Chinese Government had imperative need for increasing her present revenues in order to meet the legitimately increased expenses for education, public health, and provision for additional public utilities.

The discussion of specific forms of relief to be granted to China with regard to her tariff almost immediately revealed certain of the peculiar conditions of fact which were to render impossible the obtaining by China, in the immediate future, of her desire with respect to a considerable increase in her customs rates. The matter of this increase was indissolubly bound up with the abolition by China of Likin charges upon imported and exported commodities, and doubt was expressed whether, so long as present political conditions should persist in China, the Chinese Government at Peking would be able to take effective action throughout the Provinces with regard to this matter. Doubt was also felt by some of the representatives of the other Powers whether, aside from this, it would be advantageous to China to give to her an increased revenue which might find its way into the hands of the various military commanders, or Tuchuns, in China and thus tend to strengthen these leaders who, as yet, had not been brought into due subordination to the civil authorities. Thus, even those Delegations which were desirous of enabling China to increase her customs revenues, were inclined to impose the condition that China should give the