The Origin of Likin, 1853-1864 1390472736, 9781390472738

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-10of.China, from 1850 on, has been one of almost constantly increasing expendi­ tures.

In striving to·become part of the modern world and, at the same time,

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defend itself against certain elements in that world, the Chinese government has been compelled to spend enormous sums of money. It seems unlikely that

these sums could ever have been supplied by the traditional fiscal system

alone, which depended primarily upon the taxation of land for its support.

The commitment not to increase the land tax deprived the traditional system

of much of its flexibility, and thus contributed to the development of new

forms of revenue collection; but it seems highly probable that, had this commitment never existed, the enormous demands for funds which the Chinese government encountered during the �ast half of the 19th century would have

forced the opening of new sources of revenue.

It was almost inevitable that these new sources should consist largely of the taxation of trade and industry. We have seen that prior to the middle of the 19th century the Ch 1 ing government was supported chiefly

by the land and capitation taxe There seems to have been little question, however, that the subject of any great broadening of the base of taxation would have to be primarily trade and industry. This is shown clearly in a memorial presented by Hsi-en .7f� i, (1784-1852), who at the· time held the post of military governor of Feng-·v_;_en. 45/ This memorial was endorsed on July 10, 1843046/ In it Hsi-en argued that the current basis of taxation was unfair; agriculture was being taxed heavily, but trade ·v-ras being taxed

lightly�

He therefore proposed the institution of a tax which would amount

generally to 10 per cent of commercial profits, with certain exemptions. He predicted that such a tax would produce annually several millions of ta.els.

No action seems ever to have been taken on this proposaL During this decade the receipts were generally in excess of expenditures; probably the Ch'ing

government was not yet in such straits as to make necessary the introduction of this new tax.

Another proposal, to the effect that a tax on merchants be levied temporarily, was made in a memorial submitted late in 1852 or_early in 1853 by Pu-yen-t'ai (d. 1880), who was at the time assistant military governor residing at IlL His original memorial has not been discovered,

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but his proposal has been discussed in detail in a memoria147/ by.

Te-ying

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a sub-reader in the Hanlin Academy. The original memo- ·· · rial had been referred to the KCnistry of Finance for discussion, and it had been decided nthat for each month a tax of two ch'ien

i� ¥if should be

collected from the larger shops, and one ch'ien from the shops of medium size ., • • • YV Te-ying argued that the tax was too light, and calculated

that it would produce a monthly revenue of only some

5 0,000

taels.,

He

believed that if it were to be productive the rates would have to be in­

creased, and urged that this be done before the tax was put into effect6

This proposal, together with several other plans for raising funds by sub­

scription, was rejected by the court in an edict issued on March

25 ,

0 1853. 5 /

The court's action seems to have been based on the understanding that the

merchants in Peking were already in difficult straits, an opinion which was supported by reports it had recently received to the effect that many of the

"silver and cash shops" had recently closed their doors, and that "unemployed

persons were circulating rumors, and were relying upon pretexts to stir up trouble e ., o •" This unwillingness of the court to increase the burdens of

1 d, 211 the merehants is · qui· te possi· bly the reason why 1ei· I-hsien · ,-;t,;:, EB v � � &ffe�,

in his report on his initial success with the collection of likin, was at pains to point out that YYalthough it is called 'likin contributed by firms and shops' • • ., in reality it comes from the purchasers • • • • n 52/ In any

case, the•,••qµccess of the likin collection, which was begun only a few months later, answered in large part the needs which had been described in the

memorials of Hsi-en, Pu-yen-t'ai, and Te-ying; and thus a step was taken· toward altering--incidentally, perhaps, but nonetheless effectively--the

proportion of revenues derived from the taxation imposed upon commerce and

industry as compared with that derived from the taxes imposed upon agriculture. The times and circumstances demanded the introduction of a new form of taxa­

tion; had the likin not been.devised at this time, there is good reason to believe that some other tax on commerce and industry would have been developed to meet the current needs., In studying the origin of likin, therefore, we are studying an early and important manifestation of a fundamental and as

yet uncompleted change in the basis of Chinese public finance�

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-12Ch.apt.er II n·HE FAILURE OF TPE Ti1ADITIONAL SYSTEM

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The Increasing Need for Military Pr6visions (1850-53)

Let us now examine the conditions of Chinese finance-in the period which inrrnediately preceded the introduction of likin. Such ijformation on . � this problem as is now available fails to answer many qu0stions. It is im-

possible to discover just how rapidly the receipts from the land tax, the salt monopoly, and the trregulart t customs declined; and there is available no detailed statistical record which shows precisely how rapidly the ex­

penditures increased. If detailed statistics on these matters were avail­ able, however, they would doubtless show tDat expenditures, military ex­

penditures in particular, increased very greatly with the outbreak of the Taiping Rebellion; that, owing to the outbreak of that Rebellion, taxes

could no longer be collected in the territory which was under Taiping

control, and consequently the total revenues declined; and that, since the financial conditions under which the Ch'ing government was operating

made it impossible to increase. the taxes in the areas still under imperial

control in such a way as to compensate for the cessation of revenue normally

derived from the territory already lost to the T�ipings, the simultaneous increase of disbursements and decrease of-revenues brought the imperial government to a state of most desperate need.

These conditions are reflected in many of the edicts whi�h the court issued during this period. The Taiping Rebellion had broken out in Chin-t'ien , 1/ 2/ ts 'un )� @ · in Kuei-p' ing hsien, Kwangsi, in July 1850.,- In an edict-

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issued on April 9, 1851, the court stated that ttalthough, since the beginning of military operations in Kwangsi, victories have been achieved repeatedly,

the state of the rebels is still one of insubordination; lengthwise and crosswise [ conditiory·. a.re everywhere thu�.. Kweichow, Hunan and Hupeh

cl,),

JfovJ p::l.cked troops from Yunnan,

and Anhwei are being transferred [to Kwangsi]