Mr. Sato to Mr. Blaine.
Washington, March 7, 1890. (Received March 8.)
Sir: I am instructed by His Imperial Majesty’s minister for foreign affairs to bring to your notice a matter which has been made the subject of written and verbal communication between himself and the United States minister at Tokio.
The China and Japan Trading Company, an American firm doing business at Yokohama and several other treaty ports, began last year to import into Japan a medicinal preparation known as “Scott’s Emulsion.” This medicine was extensively advertised in the Japanese newspapers, and a number of Japanese merchants began to sell it; but they were informed by the local authorities, first at Osaka and afterwards at Tokio, that the emulsion came within the description of a “licensed medicine” as set forth in the regulations for the sale of “licensed medicines,” and that consequently they must obtain the license prescribed by those regulations. The China and Japan Trading Company thereupon complained to the United States minister, and on the 13th of last September Mr. Swift addressed a communication to Count Okuma, wherein he gave it as his opinion that the action of the Japanese authorities was in contravention of the treaty of 1858 between Japan and the United States, more especially of articles iii and iv. On the [Page 612] 4th of October Mr. Swift again addressed Count Okuma, requesting a reply to his letter of September 13, and stating, further, that he had been informed that an ad valorem excise tax of 10 per cent, was levied upon licensed medicines, and that since the date of his first communication, which had reference to the action of the authorities of Osaka Fu, the sale of “Scott’s Emulsion” had been “authoritatively prohibited” in Tokio.
In reply to these communications, Mr. Swift was informed by Viscount Aoki that the department of foreign affairs had instituted an investigation immediately upon the receipt of his first note, and had only awaited a report from the proper authorities before replying thereto. The question in regard to the excise tax raised in Mr. Swift’s second note would, Viscount Aoki added, necessitate further investigation, but no unnecessary delay would be permitted to intervene.
On the 17th of January Viscount Aoki wrote again to Mr. Swift, stating the result of his investigation, and setting forth the opinion of the Imperial Government in relation to the complaint of the China and Japan Trading Company.
From the reports received at the department of foreign affairs, it appeared that the local authorities at Osaka had directed certain Japanese subjects who were selling “Scott’s Emulsion” to obtain a license permitting them to sell the same as a licensed medicine; and that in Tokio the local authorities had not directly prohibited the sale of the emulsion, but had warned the Japanese merchants engaged in the business that they must obtain a license in accordance with the provisions of the “Regulations for the sale of licensed medicines.” It was believed that as the emulsion was a combination of cod-liver oil with certain drugs, such as hypophosphites of lime, soda, glycerine, etc., intended for direct use as a remedy for certain kinds of diseases, and accompanied by directions for use, it clearly fell within the description of that class of medicines for the sale of which special licenses are required by the regulations. For this reason Viscount Aoki informed Mr. Swift that the Imperial Government would not be justified in regarding “Scott’s Emulsion” as an ordinary article of commerce, but are obliged to require all Japanese subjects who may desire to sell it to obtain from the local authorities licenses permitting them to deal in licensed medicines.
In reply to Mr. Swift’s opinion that the action of the Imperial Government in thus requiring Japanese subjects to obtain licenses for the sale of certain articles imported from the United States, and to pay certain license fees and excise taxes thereon in accordance with Japanese law, is in contravention of articles iii and iv of the treaty of 1858, Viscount Aoki observed that, as the Japanese Government had never prohibited the sale of “Scott’s Emulsion” by any Japanese subject, it did not seem to him necessary to enter into a discussion of article iii of the treaty, which provides that Japanese subjects may sell any articles sold to them by citizens of the United States. Nor did Viscount Aoki think that the stipulations of article iv had any bearing upon the question. The fifth paragraph of that article provides that “imported goods which have paid the duty imposed by this treaty may be transported by the Japanese into any portion of the Empire without the payment of any tax, excise, or transit duty whatever.” This clause, in the opinion of the Imperial Government, can only be construed to mean that all goods imported from abroad may be transported by Japanese into any part of the Empire, and such goods shall not be liable to pay any tax in the interior of the country on account of their transportation, provided the customs duties have already been paid. There is a marked difference between [Page 613] a declaration to the effect that no tax shall be paid on account of transportation and a stipulation that no tax shall be levied in respect of the sale, use, or consumption of goods. The use of the qualifying phrase “may be transported,” clearly demonstrates the limits of the inhibition, and Viscount Aoki consequently expressed the conviction that the action of the Imperial Government in requiring every Japanese subject who may sell “Scott’s Emulsion,” to act in compliance with the provisions of the law, which are equally applicable to all medical preparations, both foreign and domestic, falling within the description of licensed medicines, is in nowise contrary to the terms of the treaty.
On the 23d of January Mr. Swift called at the foreign office and had an interview with Viscount Aoki in regard to the complaint of the China and Japan Trading Company. At its close Mr. Swift expressed the intention of preparing a précis embodying his understanding of what had been said. On the 28th of January he accordingly sent a précis to Viscount Aoki, saying in the note which accompanied it, and which was dated January 24, that if he heard no objection from Viscount Aoki before the departure of the next mail he would take the liberty of assuming that his understanding and recollection of the interview were substantially correct, and would forward the précis to the United States Government. The mail for the United States, succeeding the date of Mr. Swift’s note had actually been closed in Tokio when his note was received at the foreign office, but, aside from this, Viscount Aoki felt constrained by considerations so obvious as to need no explanation to withhold his assent from Mr. Swift’s suggestion. This course seemed all the more necessary because in several particulars Mr. Swift’s précis differed from his own recollection of the interview. In one important regard the difference was so radical as to require specific notice. I refer now to the clause in Mr. Swift’s précis wherein Viscount Aoki is quoted as saying that “he could not take into account what the American people might feel or think,” and that “the rights and interests of Japan alone were the subject of his concern.” In a note dated the 6th of February, Viscount Aoki sent to Mr. Swift a précis of the interview of the 23d of January prepared by the gentleman who acted as interpreter on that occasion. He assured the American minister that he had no recollection whatever of having used the expression above quoted, and stated that if any words bearing such a construction had escaped from him during the interview, they would have been contrary to his own sentiments and opposed to the sentiments of the Imperial Government.
Viscount Aoki also stated that, in deference to Mr. Swift’s expressed disinclination to discuss the merits of the question of the right of the Imperial Government to impose an internal tax upon imported licensed medicines, he would, of course, refrain from presenting to him those important considerations upon which the decision of the Imperial Government was predicated. He added, however, that His Imperial Majesty’s Government valued the friendship and good opinion of the United States too highly to permit the Cabinet at Washington to remain in ignorance of those considerations, and that consequently he deemed it his duty to communicate to the Government of the United States through this legation.
Acting under instructions which are the result of the foregoing circumstances, I have now the honor to transmit copies* of the correspondence to which I have alluded, including the précis of Viscount [Page 614] Aoki and that of Mr. Swift. A perusal of these documents will enable you to clearly understand the attitude of His Imperial Majesty’s Government, which, I trust, you will find it possible to agree is in accord with a suitable observance of the rights of Japan and in no sense antagonistic to the interests of the United States.
His Imperial Majesty’s Government would have me, in the first place, express their deprecation of any misapprehension which might arise concerning their action in enforcing the laws of Japan so far as regards articles of American production or importation. Generally speaking, the history of their past relations with the United States gives no occasion for a misconstruction of their motives or intentions in this behalf; and so far as the particular case under consideration is concerned, the circumstances themselves are a sufficient refutation of the statement that the Japanese Government have selected an article of American manufacture whereon to essay a new interpretation of the treaties. The law complained of was intended to be universal in its application, and whenever any questions have arisen under it, or under similar statutes, the rulings of the Imperial Government have been uniform and in harmony with the present decision. All Japanese subjects who may sell any medicinal preparation which properly comes under the classification of a licensed medicine, whether it be of domestic or any foreign manufacture, are required to use proper stamps on such medicinal preparation, according to the “stamp-tax regulations for the sale of licensed medicines;” but if they should attempt to sell such medicinal preparation, without using the stamps, against the said regulations, the local authorities may prohibit its sale, whether it be of domestic or any foreign manufacture.
As regards the construction to be placed upon article iv of the treaty Of 1858, the Imperial Government are at a loss to discover anything in that article which affects their rights in the premises. It seems clear to them that the object of the fifth paragraph of the article was intended to prevent the imposition in Japan of any transit dues upon articles of American importation. The use of the phrase “may be transported” clearly defines and limits the intention of the stipulation. There were no internal-revenue taxes, strictly speaking, in existence in Japan at the time the treaty was negotiated, while, ont he other hand, there prevailed in China a most elaborate system of transit dues, styled “likin.” Upon the inauguration of treaty” relations with the then almost totally unknown Empire of Japan, nothing was more natural than that the foreign negotiators should be guided somewhat by their experience with the near neighbor of Japan, China, and should endeavor to guard against a system of taxation like the “likin,” which experience had shown to be a potent means of restraining the growth and extension of foreign commerce with China. It seems clear from the context, not alone of the treaty with the United States, but also from similar provisions in the treaties with other western powers, that it was this specific tax alone which was sought to be prohibited, and not any such method of internal taxation as is under consideration.
These are a few, though not by any means all, of the reasons which led the Imperial Government to believe that in imposing taxes under the provisions of the regulations for the sale of licensed medicines they are clearly within their rights. But while the Imperial Government entertain these views, and feel confident that the Government of the United States may agree with them, they would not have it understood that they would inflexibly adhere to their opinion or hesitate to abolish the internal taxes upon the imported licensed medicines if it can be conclusively [Page 615] shown that they are not altogether correct in their conclusions. What they especially desire is the expression of the views of the United States upon the subject, to which, as I hardly need assure you, Mr. Secretary, they will give that careful and respectful consideration which is their due.
Accept, etc.,
- For these inclosures see inclosures in Mr. Swift’s dispatches Nos. 88 and 91, dated February 5 and 16.↩