File No. 8602/6–10.
Chargé Fletcher to
the Secretary of State.
American Legation,
Peking, December 26,
1907.
No. 801.]Sir: I have the honor to inclose copies of
recent correspondence with the Wai-wu Pu in relation to the imposition
at Nanking and at Shun Te Fu of certain taxes on American kerosene oil,
which seem to me to be in violation of treaty rights and against which I
have protested.
The facts fully appear in the correspondence. Briefly stated, they are as
follows:
At Nanking a contribution, called voluntary, but collection of which was
enforced by fine and imprisonment, was levied by the local authorities
on kerosene oil, the proceeds being devoted to the maintenance of a
hospital. Nanking being an open port, I have taken the position that the
taxes and charges which may be levied on American goods there are only
those provided for by treaty, irrespective of whether in foreign or
Chinese hands and whether the duty certificates have been canceled or
not.
At Shun Te Fu the case differs slightly. There the tax has been imposed
on kerosene oil by the local magistrate in aid of a girls’ school, and
under Article XI of the commercial treaty of 1896 between China and
Japan, which provides that—
It shall be at the option of any Japanese subject desiring to
convey duly imported articles to an inland market to clear his
goods of all transit duties by payment of a commutation transit
tax or duty, equal to one-half of the import duty in respect of
dutiable articles, and 2½ per cent upon the value in respect of
duty-free articles, and on payment thereof a certificate shall
be issued which shall exempt the goods from all further inland
charges whatsoever—
seems to be in contravention of our treaty rights. To my
note in reference to this case I have as yet received no reply.
In the Nanking case the principal question involved is whether the
duty-free area of an open port includes the whole area of the port or
city. This point has never been definitely settled, except in the case
of Changsha, when China agreed to the British contention, but the treaty
powers have always insisted that it includes the whole area of the port,
and my protest is based on this assumption.
The fact that the taxes are collected from Chinese subjects complicates
the question and makes effective protest and action on the part of the
legation difficult, but in view of the far-reaching consequence of the
exercise of this alleged right of local taxation, if allowed to
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go unchallenged, I have felt
obliged, while disclaiming any desire or intention of interfering in
purely Chinese questions, to point out its effect on American trade and
to protest against it as in violation of our treaty rights. I have not
asked for a restitution of the money collected, but merely that orders
be given to the local authorities to refrain from the collection of the
taxes.
Cases of this kind may be expected to recur, and I have the honor to
request the department’s instructions in the premises.
I have, etc.,
[Inclosure 1.]
Chargé Fletcher
to the Prince of Ch’ing.
American Legation,
Peking, November 6,
1907.
No. 321.]Your Imperial Highness: I have the honor to
call Your Highness’ attention once more to the case of the levy at
Nanking of a tax on American kerosene oil in the hands of native
dealers under the name of a voluntary contribution for the support
of a hospital.
On September 27, 1906, Mr. Rockhill addressed a note to Your Highness
with reference to this taxation and requested Your Highness “to
instruct the central likin office at Nanking that the levy of any
tax whatsoever upon foreign goods which have already paid the inland
transit duty is in violation of existing treaties and must be
discontinued.”
To this note Your Highness replied on October 20, 1906, by
communicating the reply of the superintendent of southern trade to
the effect that the sums referred to had been collected as a
“voluntary contribution “of Chinese merchants in aid of charity and
has nothing in the world to do with the duty and likin collected by
the Government. The officials simply allow the people to do as they
please in the matter and certainly can not either compel them to pay
or prevent it.
Relying upon this statement the legation regarded the matter as
settled and closed. It is now, however, reported by the American
consul at Nanking that two native dealers, Heng Ieng-jun and Liu
Shen Kuan, have been arrested and imprisoned by orders of the
central likin office for refusing to pay this contribution, and
compelled to sign a written statement that they will always,
hereafter, pay this tax or contribution willingly.
This legation, therefore, while disclaiming any intention of
interfering in purely Chinese questions, feels in duty bound to
protest earnestly against the imposition of any additional tax or
charges whatsoever, either in the form of a contribution or
otherwise, upon American goods, whether in Chinese or foreign hands,
which have paid the duties provided for by treaty.
That the tax referred to is such a charge seems clear, and it can not
be admitted that because the proceeds of the contribution are
devoted to a charitable institution and not received by the
Government that it is not any the less a tax.
It has been designated in previous correspondence as “a voluntary
contribution,” but the arrest and imprisonment by the local
authorities of dealers who have refused to pay it divests it of any
voluntary character and proves it a tax under another name.
Under these circumstances I have the honor to again request Your
Highness to instruct the local authorities to refrain from enforcing
the collection of this so-called contribution.
I avail, etc.,
[Inclosure 2.]
The Prince of Ch’ing
to Chargé Fletcher.
Foreign Office,
Peking, November 20,
1907.
Your Excellency: I have the honor to
acknowledge the receipt of Your Excellency’s note of November 6,
1907, with regard to the collection of a voluntary contribution in
aid of charity by the central likin office at Nanking. In
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the note under
acknowledgment you state that you have received a communication from
the American consul in Nanking to the effect that two native
dealers, Heng Feng-jun and Liu Shen-kuan, have been arrested and
imprisoned by order of the central likin office, and compelled to
sign a written statement that they will always hereafter pay the
contribution willingly; that such action proves this contribution
nothing more nor less than a tax, and that you must, therefore,
again request that the local authorities be directed to refrain from
enforcing the collection of this so-called contribution.
Upon receipt of your note my board telegraphed immediately to the
superintendent of trade for the south, directing that the matter be
investigated and a report made of the action taken. His reply has
now been received and is to the following effect:
“The central likin station reports that this contribution was
voluntarily levied on themselves by the merchants; that recently one
or two dealers, selfishly seeking their own private gain and having
no regard for the public welfare, had refused to pay their
contributions; that after urgent exhortations, however, these men
had paid the money as before, and the affair had been closed; that
the likin station had arrested no one and taken no compulsory
measures; and finally, that this contribution was levied after the
cancellation of the duty certificate and the delivery of the goods
to Chinese firms, and, therefore, was no concern whatever of any
foreign merchant.
“Since the case has thus been settled, then the collection of the
contribution should go on as formerly. And as the money is used for
the charitable purpose of assisting the Chinese foreign hospital,
the American minister will be glad to give us his hearty cooperation
at all times.
“Please transmit to him this reply.”
It appears from the above, then, that no arrests have been made and
no compulsion brought to bear; and as the case in question has been
settled, the collection of the contribution will be continued as
formerly. Since the money is collected for a worthy cause I think
that Your Excellency can not but be glad to assist in the
accomplishment of an effort to benefit the public at large.
It becomes necessary for me to send this reply for Your Excellency’s
information.
[Seal of the Waiwu Pu.]
[Inclosure 3.]
Chargé Fletcher
to the Prince of Ch’ing.
American Legation,
Peking, December 26,
1907.
Your Imperial Highness: I have the honor to
acknowledge the receipt of Your Highness’ note of November 20 last,
in reply to my note of November 6, 1907, with regard to the
collection of a contribution or tax on American kerosene oil by the
central likin office at Nanking.
In my note of November 6, last, to which I have the honor to refer, I
called Your Highness’ attention to the case of two native dealers in
American kerosene oil who had been arrested for nonpayment of this
contribution, and compelled to pay it, as well as to give security
that they would pay it in the future.
In reply, Your Highness quoted the reply from the superintendent of
southern trade to the following effect:1
Your Highness stated in conclusion that it appeared that no arrests
had been made and no compulsion brought to bear, and that as the
case in question had been settled, the collection of the
contribution will be continued as formerly.
Upon receipt of Your Highness’ reply, the American consul at Nanking
was again instructed to investigate the case and to make a full
report, and his attention was called to the fact that it had been
reported to Your Highness that no arrests had been made. I am now in
receipt of his reply, informing me that two native dealers (Na Ting
Liang and Fang Lien-chen) were on the 22d of the 8th moon of this
year, arrested by the Kiang Ling magistrate at the request of the
likin office and incarcerated in the magistrate’s jail because of
their refusal to pay this oil contribution. The former was detained
14 and the latter 9 days, and were only released upon signing a
written statement that they
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would in future pay this tax and were compelled to give security
to that effect. They were then assessed $283 and $168, respectively,
and informed that if in future they refused to pay this tax they
would be severely punished and their shops closed. Since then they
have refused to deal in American kerosene oil and the American trade
has thus suffered a severe injury.
The superintendent of southern trade, in his reply above quoted,
states that:
“This contribution was levied after the cancellation of the duty
certificate and delivery of the goods to Chinese firms, and
therefore was no concern whatever of any foreign merchant.”
Against this position the legation feels bound to enter its protest,
and, as stated in my note of November 6 last, can not agree to the
imposition of any additional tax or charge whatsoever, in the form
of a contribution or otherwise, upon American goods which have paid
the duties prescribed for by treaty, irrespective of whether the
duty certificates have been canceled or not.
It becomes my duty therefore to again request Your Highness to
instruct the local authorities to refrain from the collection of
this so-called contribution.
I avail, etc.,
[Inclosure 4.]
Chargé Fletcher
to the Prince of Ch’ing.
American Legation,
Peking, December 3,
1907.
No. 333.]Your Highness: I have the honor to call
Your Highness’ attention to the imposition at Chun Te Fu of a tax of
60 cash a case on American oil, which in the opinion of this
legation, is in violation of Article XI of the commercial treaty of
1896 between China and Japan.
The facts of the case as reported to the legation are as follows:
The local magistrate at Shun Te Fu has lately issued a proclamation
to the effect—
“That whereas the establishment of girls’ schools is very important,
and whereas there are no funds on hand to meet the expenses of such
schools, the magistrate has decided to levy a tax of 60 cash upon
all persons who purchase a case of oil, or 60 cash for each case he
purchases; the said tax, moreover, to be collected by the seller of
the oil and turned over to the local tax office which collects the
tax on skins and furs. Further, in order to prevent any mistake in
the collecting whereby full returns would not be made, the seller is
ordered to produce his invoices for each consignment of oil which he
may receive, have them stamped at the local tax office, and then
each month pay to this office the 60 cash which he has collected
from the purchasers of oil; and if his tax receipts show any
shortage he is to be fined ten times the amount of such
shortage.”
and has proceeded to levy the tax mentioned. While
the tax is stated in the first part of the proclamation to be on the
purchaser, this seems a mere subterfuge, as the seller is made
entirely responsible for the amount of the tax, and in any event it
is clearly a tax on American goods which have already paid the
import and inland transit charges, and are therefore exempt from all
further taxation.
In similar cases which have arisen the argument has been brought
forward by the local authorities that after the transit passes have
been produced and canceled the interest of the foreign merchant
ceases and they are at liberty to impose whatever taxes they may
choose to levy. This position can not be agreed to by the
legation.
It is hardly necessary to recall to Your Highness the provisions of
Article XI of the treaty above referred to, reading as follows:
“It shall be at the option of any Japanese subject desiring to convey
duly imported articles to an inland market to clear his goods of all
transit duties by payment of a commutation transit tax or duty equal
to one-half of the import duty in respect of dutiable articles and
2£ per cent upon the value in respect of duty-free articles, and on
payment thereof a certificate shall be issued which shall exempt the
goods from all further inland charges whatsoever.”
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As stated by Mr. Rockhill in his note to Your Highness dated
September 2f, 1906—
“It is plain, from the above language, that it makes no difference
whether or not the goods be already sold to a Chinese firm and
delivery of them taken, the goods are free of all further inland
charges whatsoever after the inland transit tax has once been
paid.”
The growing use in the interior of kerosene oil, one of the principle
American imports to China, gives the question a more than local
importance, for if this article is singled out for taxation locally
the trade in it will soon be extinguished at all nontreaty places
and the transit-pass provisions of the treaties with respect to this
important item of American trade will be rendered useless and
void.
This case has been taken up by the American consul general with the
customs taot’ai at Tientsin without result, and it now becomes my
duty to bring the matter to the attention of Your Highness, and I do
so with the earnest hope that Your Highness will agree with me that
this taxation, no matter how laudable the object to which the
revenue derived therefrom is applied, is not according to treaty nor
consistent with the good trade relations which we hope to see
maintained between our respective countries, and that Your Highness
will give the necessary instructions that the local authorities
concerned shall cease to tax locally goods which have already paid
the full charges stipulated in the treaties.
I avail, etc.,
