to effect local settlement. In the meantime company may consider it desirable to prepare formal diplomatic claim as suggested in your instruction of April 22 to Hankow. Report developments. STIMSON 611.937/24: Telegram The Minister in China (MacMurray) to the Secretary of State PEKING, July 12, 1929-3 p. m. [Received July 12-2:30 p. m.62] 564. Department's 221, July 1, 7 p. m. 1. Following from Hankow: "July 10, 10 a. m. Nanking authorities have instructed Customs to collect special tax of $1 per ton on wood oil stored by Werner G. Smith Company, an American concern, in storage tanks of Standard Oil Company here. Tax not being collected from other concerns and is purely discriminatory. Chinese concern immediately adjoining Standard Oil Company tanks is not paying tax. Smith Company notified by Customs if taxes not paid by July 15th permission to store wood oil in Standard Oil Company tanks will be canceled. I suggest advisability of Legation requesting Nanking Government cancel tax immediately on the basis of discrimination against American company." 2. Above repeated to Nanking with following instruction: 63 "Similar tax was subject of negotiations by Perkins in Nanking in January of this year and was eventually abolished in April following representations made by Lockhart to T. V. Soong, then in Hankow. Renewal of tax is reported as directly discriminatory against American firm and you should accordingly on my behalf register emphatic protest with Ministry of Foreign Affairs and urge that Ministry of Finance issue immediately instructions for cancellation of tax. Reply by telegraph." MACMURRAY 611.937/25: Telegram The Minister in China, (MacMurray) to the Secretary of State 617. My 564, July 12, 3 p. m. PEKING, July 23, 1929-10 p. m. [Received July 23-12:20 p. m.] 1. In answer to my personal representations on July 12th Minister for Foreign Affairs assured me of his immediate attention to the matter of discrimination against Werner G. Smith Company but no Telegram in two sections. 63 Chinese Minister of Finance. relief has as yet been afforded. I am accordingly instructing American Consul at Nanking to renew representations to Minister for Foreign Affairs. 2. Reference first sentence of quotation in paragraph 2 of my 564, July 12, 3 p. m. Following from American Consul General at Hankow: "July 16, 5 p. m. Tax referred to in my 104, July 10, 10 a. m. has no relation to the special tax on wood oil abolished last April following representations by me to T. V. Soong. The new tax of $1 per ton is intended to be collected only [on] wood oil stored by the Werner G. Smith Company in the Standard Oil Company storage tanks and is being assessed against no other company." MACMURRAY 611.937/26: Telegram The Minister in China (MacMurray) to the Secretary of State PEKING, August 17, 1929-6 p. m. [Received August 17-6:10 p. m.] 725. My 617, July 23, 10 p. m. Following from American Consul at Nanking: "August 15, 3 p. m. Minister of Foreign Affairs informs me that Minister of Finance has instructed Superintendent of Customs at Hankow to discontinue collection of taxes wood oil stored by Smith Company in Standard Oil Company tank. Despatch follows." MACMURRAY 693.003/915: Telegram The Minister in China (MacMurray) to the Secretary of State PEIPING, October 18, 1929-5 p. m. [Received October 19-2:30 p. m.] 903. (a) Cunningham, as Senior Consul, has submitted for the consideration of the diplomatic body the text of a recent notification Number 1157, issued August 12th by the Commissioner of Customs at Shanghai, setting forth a new version of import tariff under rule I. Pertinent portions of the notification are as follows: 66 "In accordance with instructions received from the Inspector General of Customs the public is hereby notified that Rule I of the Former Import Tariff, providing, inter alia, for arbitration in cases of dispute Notice corrected on basis of complete text transmitted to the Department by the Consul General at Shanghai in his despatch No. 6375, August 16; received September 13, 1929 (693.002/96). Omissions as indicated in the original telegram. regarding valuation of goods, et cetera, is abolished and a new rule is promulgated in which a Tariff Board of Inquiry and Appeal takes the place of the former Board of Arbitration. The new version of rule I is as follows: 1. The duty-paying value of any import liable to an ad valorem rate of duty shall be determined on the basis of the wholesale market value of the goods in local currency at the port of importation. This latter value, when converted into Haikwan taels, shall be considered to be higher than the duty-paying value by (a) the amount of the duty on the goods, and (b) 7 per cent of the duty-paying value of the goods. . . . 5. The importer, if dissatisfied with the decision of the Customs as to the value or classification of imported goods, or the amount of duty or charges assessed thereon, may, within twenty days after the filing of the application to pay duty on [or other] Customs entry, file a protest in writing with the Commissioner of Customs, setting forth specifically his objection thereto. Pending a decision in the case, the merchandise-in the discretion of the Customs-may be released to the importer upon payment of a deposit sufficient to cover the full amount of duty and such additional duties as may be claimed by the Customs. Upon the filing of protest the Commissioner shall within fifteen days thereafer review his decision, and, if the protest is not sustained, the case shall be referred to the Inspector General of Customs with the request that it be submitted to the Kuan-Wu Shu for the consideration and decision of the Tariff Board of Inquiry and Appeal. (Kuan-Wu Shu is understood to be the term adopted by the Nationalist Government as the equivalent of the former Shui Wu Ch'u.) 6. Questions regarding procedure, et cetera, which had not arisen [may arise] during the sittings of the Tariff Board shall be decided by the majority. The final finding of the maximum rate [majority of the] Board, which must be ratified by the Kuan-Wu Shu and announced within fifteen days of the reference (not including holidays), shall be binding.... 9. This provisional rule is effective as soon as it is promulgated. It is subject to change at any time upon notice being given." The complete text of the notice is being forwarded by mail. (b) It will be noted that the new procedure for determination of disputes with regard to the valuation of imports provides for unilateral action by the customs authorities instead of the arbitral method of procedure specified in rule I, annex II, of the Sino-American treaty of October 20, 1920. Although the tariff treaty of July 28 [25], 1928,6 does not specifically provide for the annullment of the method fixed by the treaty of 1920, it does state in article I that the "principle of complete national tariff autonomy shall apply." I therefore assume that the Department would not desire that any protest should be made by the Consul General at Shanghai against Foreign Relations, 1921, vol. 1, pp. 459, 490. the application of the new procedure as laid down in the notification of August 12th. I shall, however, await your instructions before taking a definite position in the matter. MACMURRAY 893.512/998 The Minister in China (MacMurray) to the Consul at Tsingtao (Dorsey)9 PEIPING, October 21, 1929. SIR: I beg leave to acknowledge the receipt of your despatch No. 340, of October 15, 1929,70 in which you inform the Legation that the Goods Tax now being collected at Tsingtao is the same as that referred to by the American Consul at Tsinan as the Shantung Provincial Consolidated Goods Tax, and in which you inquire whether or not a protest should be entered with the local authorities in view of the discriminatory features of the tax. Since the provisions of this tax appear to be clearly discriminatory, you are instructed to lodge a protest on these grounds with the local authorities. I am [etc.] 693.003/915: Telegram J. V. A. MACMURRAY The Secretary of State to the Minister in China (MacMurray) WASHINGTON, October 24, 1929-3 p. m. 347. Your 903, October 18, 5 p. m. The Department does not perceive from your telegram that any reasons exist for protesting against the application of the new procedure. STIMSON 611.937/33: Telegram The Minister in China (MacMurray) to the Secretary of State 1016. Following from Hankow: PEIPING, November 20, 1929-8 p. m. [Received November 21-6 a. m."] "November 18, 4 p. m. Wood oil trade is again agitated by collection of tax of 90 cents per picul on wood oil under consolidated tax schedules. This tax is in effect likin, and taxable [taxing?] officials are insisting on its payment on export cargo passing through Hankow regardless of record of it[s] originating in or outside Hupeh, provided that cargo is not covered by a receipt showing that the tax has already Copy transmitted to the Department by the Minister in his despatch No. 2388, October 21; received November 22, 1929. been paid. While the Central Government has not yet formally abolished the consolidated tax or likin in Hupeh, the drastic manner in which tax officials are enforcing payment is causing an evidence of friction between American firms and the tax office. Chinese employees of foreign firms have been seized as a means of compelling payment. If the Legation perceives grounds upon which to lodge a protest with the Nanking Government against the tax, the trade would be gratified." Subject to the Department's approval, Legation proposes to instruct Hankow that, in the absence of discrimination, it does not feel that protest to Foreign Office is called for and to suggest, in his discretion, Consul General attempt, by informal local arrangement, to bring about less drastic means of collecting tax. Since immunity of Chinese employees of American firms seems to be based on precedent rather than treaty, I do not feel that protest against their arrest would be productive of any good result." MACMURRAY PROTESTS BY THE UNITED STATES AGAINST PROPOSED CHINESE FINANCIAL MEASURES DIVERTING REVENUES FROM PAYMENT OF AMERICAN LOANS IN DEFAULT "3 893.51/5113: Telegram The Minister in China (MacMurray) to the Secretary of State PEKING, January 28, 1929-3 p. m. [Received 8:27 p. m.] 59. 1. I have received a note of January 18 from Doctor Wang " informing me that: "The State Council of the Nationalist Government on January 4, 1929, voted upon and decided to set aside yearly $5,000,000 of the new customs revenues for use in the adjustment of both foreign and domestic loans; and to establish a committee for, and only for, the adjustment of foreign and domestic loans. In the future the responsibility for the adjustment of all foreign and domestic loans that should be adjusted will rest upon the above-mentioned committee." 2. Unless otherwise instructed I propose to acknowledge the receipt of this note without comment. MACMURRAY "The Secretary of State, in telegram No. 383, November 23, replied: "Proposal in last paragraph approved." (611.937/33) "Continued from Foreign Relations, 1928, vol. I, pp. 531-538. "C. T. Wang, Chinese Minister for Foreign Affairs. |