SPECIAL REPORTS FOB FEDERAL TRADE COMMISSION. 297
about 7,500 tons daily, form the most valuable of the subsidiary
properties owned by the South Manchuria Railway Co.
The Mitsui Bussan Kaisha is given a substantial advantage over
their competitors in certain lines in the matter of inland taxes. The
present inland taxes on foreign goods, with a few exceptions, amount
to 3 per cent. By a special arrangement between the Mitsui company
 and the tax offices located in the principal markets of Manchuria
 the former by paying to the latter a stipulated amount per annum
which in some instances is only 3 or 4 per cent of the amount. normally
 - accruing, become exempt from the payment of the taxes.
Whenever a sale of goods is made a bill is rendered to the dealer,
which shows that the Mitsui company is responsible for the taxes.
Whenever the tax official calls upon the dealer for taxes he is shown
the bill and referred to the Mitsui company. Similar arrangements
have been entered into by the Standard Oil Co., the Singer Sewing
Machine Co., British- American Tobacco Co., the British and Russian
oil concerns, etc., all of which firms maintain distributing organizations
 here. Also a consumption tax of 2 per cent is imposed on foreign
 ey in the hands of the native merchants. All the above firms
by selling direct to retailers and by giving them a receipted bill covering
 all duties and charges have enabled the latter to evade the payment
 of this tax as well. Mention should also be made of the fact
that much of the Japanese goods imported into Manchuria and intended
 to be marketed in the interior does not take out a transit pass,
as they are marketed in the various Japanese settlements along the
South Manchuria Railway by Japanese sho keepers, who are not
liable to Chinese taxes. By way of Ss a transit pass, I
should add that if imports are intended for an “inland ” place, i. e.,
any place not a treaty port, the purchaser has the option of paying
the inland taxes or likin en route or of paying half the import duty
additional, not exceeding a nominal 23 per cent ad valorem, and obtaining
 a “transit pass”; this certificate exempts the goods from all
further inland charges. The injurious effect of this system upon
American trade generally is apparent when it is recalled that, aside
from kerosene, tobacco, and sewing machines, American goods, especially
 cotton piece goods, are chiefly imported from Shanghai through
Chinese and ia by Chinese, who pay these taxes. On the
other hand, Japanese products marketed in these Provinces are almost
entirely imported by Japanese subjects, and a considerable portion
is distributed by Japanese merchants. It is therefore quite easy for
them, as well as for non-Japanese firms mentioned above, to see that
their treaty rights are respected as regards the imposition of taxes.
The TE terms given by the Japanese are 16 days for spot cargo
and 1 month for ordered cargo secured on documents signed by the
customers. In cotton cloths, which are carried in stock, the Mitsuis
usually give 80 to 45 days’ time, and occasionally up to 2 months.
Some of the Chinese merchants buy outright from the Mitsuis, while
others sell for them on the usual 2 per cent commission. Payments
must be made in gold yen or its equivalent. Extensions of credit
are made as required, the customers being charged interest, the rate
in such cases being quite high.
American cotton goods are recognized by the Chinese as being
superior to those made in Japan. The superiority of American