File No. 893.512/52.

Chargé MacMurray to the Secretary of State.

[Extract.]
No. 683.]

Sir: I have the honor to enclose herewith for the information of the Department a copy of a circular instruction which the Legation issued on June 8 last to the various Consular officers in China, communicating in reply to numerous inquiries the position taken in regard to the Chinese Stamp Tax Law in conformity with the Department’s instruction No. 90 of May 4, 1914.65

There is also enclosed a copy of a despatch (No. 514) from the Consulate General at Shanghai under date of the 26th ultimo, making certain inquiries as to the effect of the view thus taken; also a copy of the Legation’s reply of today’s date, stating that the Legation construes the attitude of our Government in this matter as having only the negative effect of relieving its nationals from any obligation and from any correlated disability imposed by the Stamp Tax Law; it cannot be construed as in any way affecting [Page 223]the obligations and disabilities imposed by that law upon Chinese citizens—unless it were that our Government, refusing to recognize the payment of stamp tax as a condition to the legal validity of a contract entered into between a Chinese and an American citizen, might perhaps maintain the position that such a plea could not be effective as a defense to an action in a Chinese court by an American citizen or corporation seeking a remedy under such a contract. I respectfully request to be instructed whether this interpretation correctly sets forth the views of the Department.* * *

[Inclosure 1.]

[Untitled]

No. 40.]

circular.

To the American Consular Officers in China.

Gentlemen: In view of the inquiries addressed to the Legation by several of the Consular Officers in China, as to the liability of American citizens for the payment of stamp taxes imposed by the Chinese Government under the Stamp Tax Law enacted in October, 1912, I enclose for your information a copy of the Diplomatic Circular No. 39 of February 19, 1914, to which is appended a translation of the collective note in which the Diplomatic Body advised the Wai Chiao Pu that it could not accept the proposed law as applicable to nationals of the Treaty Powers in China.

In accordance with the terms of this collective note, the Legation regards American citizens and corporations as not being liable to the payment of stamp taxes.

I am [etc.]

Paul S. Reinsch.
[Subinclosure.]

Diplomatic Circular No. 39.

With reference to the Circular No. 19, the Dean has the honour to circulate herewith, for the signature of his Honourable Colleagues, copy of the draft collective note to the Wai Chiao Pu on the Stamp Tax Law, in the terms agreed upon at the meeting of February 17.

translation.

Mr. Minister: In conformity with the desire expressed by Your Excellency in a despatch of September 29 last, the Diplomatic Body has examined the question whether there would be ground to apply, to documents and contracts concluded in China between foreigners and Chinese, the law concerning the stamp tax of which a copy was annexed to the communication cited above.

The Chiefs of Mission are of the opinion that, before pronouncing upon the imposition on their nationals of a new tax not contemplated by the Treaties, they should refer the matter to their respective Governments; and they consequently find themselves obliged to protest against the statement—which can be the result only of misunderstanding contained in the note from the Wai Chiao Pu, to the effect that they had given their adhesion to the above mentioned stamp tax law thus rendering it applicable to foreigners.

In transmitting these documents to their respective governments, they believe themselves forced to direct attention to certain questions raised by this communication, and to express the opinion that the new law could not in any case be rendered applicable to their nationals in its present form.

(Signed by Ministers and Chargés d’Affaires.)
[Page 224]
[Inclosure 2.]

Consul General Sammons to Chargé MacMurray.

No. 514.]

Subject: Chinese Stamp Tax.

Sir: With reference to the Legation’s recent circular instruction on the Chinese Stamp Tax Law, to the effect that in the opinion of the Legation American citizens and corporations are not liable to the payment of such stamp taxes, the Standard Oil Company of New York writes me under date of June 23, 1915, requesting information as to the effect of the law on transactions between the Company and Chinese, submitting the following query:

1.
Is a native bank order, drawn by a Chinese in the interior, payable to our order in a Treaty Port subject to stamp tax?
2.
Is any agency agreement, construction contract, or other similar document, made out between this Company and a Chinese subject to stamp tax, and would stamps have to be affixed before taking such a document before a Chinese Court.

I have the honor to request the Legation’s instructions on the subject.

I have [etc.]

Thomas Sammons.
[Inclosure 3.]

Chargé MacMurray to Consul Gauss, in charge.

C. No. 1165.]

Sir: The Legation has received the despatch (No. 514) of June 26th in which you present in behalf of the Standard Oil Company of New York two queries as to the effect of the refusal on the part of the American Government to recognize the Chinese Stamp Tax Law as applicable to its nationals. In reply, I have to state that inasmuch as the questions presented are hypothetical, the Legation can not undertake to give in advance any authoritative advice or indication of the views by which the action of the Government would be controlled in the event that a case actually involving these questions were to arise.

Although not undertaking, therefore, to express any opinion upon the specific points raised by these inquiries, I have to state, for the information and guidance of the Consulate General, that the Legation construes the attitude of our Government in this matter as having only the negative effect of relieving its nationals from any obligation and from any correlated disability imposed by the Stamp Tax Law; it cannot be construed as in any way affecting the obligations and disabilities imposed by that law upon Chinese citizens—unless it were that our Government, refusing to recognize the payment of stamp tax as a condition to the legal validity of a contract entered into between Chinese and an American citizen, might perhaps maintain the position that such a plea could not be effective as a defense to an action in a Chinese court by an American citizen or corporation seeking a remedy under such a contract.

I am [etc.]

J. V. A. MacMurray.