File No. 893.512/71

Minister Reinsch to the Secretary of State

No. 1215

Sir: With reference to the Legation’s despatch No. 686 of July 12, 1915,47 and to the Department’s instruction No. 324 of September 16, 1915,48 I have the honor to transmit herewith a copy of a further despatch (No. 310 of August 21) from the Consulate General at Hankow, in regard to the so-called 99 Mercantile Tax, together with the instruction (No. 1873) which the Legation addressed to the Consulate General on the 27th instant in reply thereto.

In view of the Standard Oil Company’s being able to avail itself of the method contemplated in the treaties with China for exemption from taxation in the interior of whatever nature, namely the taking out of transit-passes for goods shipped into the interior, the Legation has felt it necessary to inform this company that if it finds the pao-shang-piao system more advantageous than the transit-pass system, it may be assumed to accept the defects as well as the advantages of that arrangement.

The Consul General at Hankow was accordingly instructed that the Legation can undertake to do no more than secure the Standard Oil Company against actual discrimination or other demonstrably unlawful acts of the Chinese authorities, if it chooses to carry on its business in Kiangsi Province under the pao-shang-piao system. I hope that the Legation’s attitude in this matter will receive the Department’s approval.

I have [etc.]

Paul S. Reinsch

Consul General Cunningham to Minister Reinsch

No. 310

Sir: I have the honor to transmit a copy of a letter from the Standard Oil Company of New York, Kiukiang Branch, dated August 17, 1916, regarding the efforts of the Kiangsi officials to collect the 99 Mercantile Tax. Inasmuch as this tax does not seem to be any more regular than it was a year ago when various protests were filed by this office against it, it would seem a suitable moment to renew the protest but for the fact that the question has been referred to the Legation for action. It appears that the Kiangsi officials in certain districts intend to collect the tax unless strong protests be filed against such, so that foreign merchandise will be protected from this discriminatory tax. If further action is advisable by this office I would request instructions regarding the mode that it shall take. It is doubtful whether anything of a permanent character can be accomplished by this Consulate General, and certainly the result will not be nearly so effective as it will be should the Legation procure a settlement in Peking.

I have [etc.]

Edwin S. Cunningham
[Page 233]


The American Consul General, Hankow.

Sir: The further efforts of Kiangsi officials to collect the “99 Tax,” reported in our letter of July 27, ’16, are continued and have been extended to other points, notably Kingtehchen and Kanchowki. Unless prompt action is taken, it is possible that we shall be obliged to permit our agents to compromise the question in order to continue business.

In this connection we should advise you that the new British Consul at this port has expressed entire willingness to adopt the same attitude which we have assumed and is already in communication with the officials at Nanchang. We understand that, in reply, the officials have reverted to their old counterattack on general trading rights of foreigners in the interior. As we have frequently stated, we wish to avoid, if possible, a reopening of this question of trade rights.

Very truly yours,

Standard Oil Company of New York, Kiukiang Branch
Herbert R. Everall, Attorney

P. S.—We are just in receipt of a telegram from our agent at Kingtehchen requesting immediate assistance and support with reference to this question.