raise tobacco which is consumed mostly in Northern Kwang-tung. If it were shipped direct it would be charged en route a large and uncertain likin tax, the uncertainty of the amount being the worst feature, as it may easily convert an apparently profitable transaction into a serious loss. To avoid this the tobacco is loaded on a sea-going junk and shipped to Hongkong. From there the junk brings it back and enters it at the point of original shipment as a foreign importation. For this the merchant secures a transit pass under which he ships it to its destination. He has paid the freight and import taxes of five per cent, each; the transit pass fee of two and a half per cent., and the shipping charges both ways to Hongkong, and the expense of rehandling. These items he can ascertain accurately beforehand, and, therefore, prefers paying them rather than run the likin gauntlet, which may be from ten per cent, to fifty per cent, or more.
The Chinaman is by very instinct a trader, is quick to see and seize an opportunity to turn a profit, and has, what few other Eastern Asiatics have, a high sense of commercial honor. Although the great mass of them is poor, yet there is a wealthy class, and there exists, even in the interior, a demand for much more than the mere necessaries of life.
Now, what have the United States done in the past in this great country, how do they stand there to-day, what can they do and what should they do in the future? These are the considerations that most concern us.
To answer the first two of these questions there are two sources of statistics which we can examine—the returns of the United States, and of the Imperial Chinese Maritime Customs. Unfortunately, both of these sources are rendered valueless for exact deductions because of Hongkong. This, as is well known, is a British colony, and one of the few places on the globe where actual free trade exists. Being a British colony, enjoying free trade and possessing a magnificent harbor, it has become a great depot, or warehouse, where goods, whose ultimate destination, either in China or anywhere else in the Far East, is not definitely fixed, are shipped in the first instance, and thence rebilled to the point of consumption.
In this act their nationality is lost, for the returns of the shipping nation classes them as exports to Hongkong, while China, of course, treats them as imports from that place. The import returns of the Imperial Maritime Customs show that nearly one-half of the foreign commerce entering China comes from Hongkong. Thence many writers fall into errors, either by taking the direct trade between China and any other country as limited to the reported figures, or by classing Hongkong under the head of Great Britain and Colonies. The conclusions reached in these ways are grievously wrong. Although foreign
