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Rh tax was to be collected outside the harbour of Hongkong, at Kapshuimoon in the west, at Kowloon city in the north, and at Fattauchau, just outside the Lyeemoon in the East. When Sir Richard discovered that these blockade stations levied, in addition to the fixed tax on opium which he did not object to, also undefined duties on goods of all sort (food stuffs excluded) when carried by native junks, he pressed the Chinese Authorities for a copy of their tariff. But they neither could nor would fix a tariff, as various monopolies farmed out and sublet to individual were mixed up in the matter with provincial and Imperial interests, and as it suited the interests of a corrupt system of irregular levies better not to be tied down to a fixed tariff. Sir Richard then strengthened his water police force and obtained a steam launch, Blanche, to assist the Colonial junk or gun-boat, Victoria, in patrolling the waters of Hongkong to prevent trespass. Moreover, he refused to allow any Chinese gun-boat or cruizer to anchor in the harbour unless flying a recognized official flag. The Chinese Authorities yielded this point and adopted first a triangular flag (October, 1868), then provisionally a square (March 19, 1869), and finally a yellow triangular flag with the emblem of a flying dragon.

The interference with the legitimate native trade in foreign goods, resulting from the Customs Blockade of Hongkong, aroused a considerable commotion in the Colony. A universally signed protest, in form of a Memorial to the Secretary of State, was presented to the Governor (July 20, 1868). Fresh excitement arose when it became known (July 24, 1868) that the Viceroy of Canton had opened in Hongkong an opium tax station in charge of a well-known resident (Ho A-loi) and when a salt revenue station and other offices, opened in town by the officers of the Li-kin stations, were discovered, disclosing a regular organisation intended to collect in Hongkong all the various taxes demanded at those stations and to issue passes in Hongkong under the seal of the Chinese Government. Sir Richard immediately suppressed every such office that was discovered. On February 15th, 1869, the Assistant-Harbourmaster (A. Lister) 27