File No. 893.512/73

Minister Reinsch to the Secretary of State

No. 1263

Sir: In continuation of the Legation’s despatch No. 1215 of September 29 last on the subject of the so-called 99 Mercantile Tax levied in Kiangsi Province, I have the honor to enclose herewith a further despatch from the Consulate General at Hankow (No. 340) [Page 237] under date of the 3d instant, reporting that the Kiukiang branch of the Standard Oil Company has taken steps in pursuance of the Legation’s suggestion that it revert to the method of shipping its imports into Kiangsi Province under the protection of transit passes rather than under the pao-shang-piao system.

There is also enclosed for the information of the Department a copy of the Legation’s reply (No.1964) of today’s date, which seemed to be necessary in view of the company’s apparent misunderstanding of the Legation’s position in this matter.

I have [etc.]

Paul S. Reinsch
[Inclosure 1]

Consul General Cunningham to Minister Reinsch

No. 340

Sir: Referring to the Legation’s instruction No. 1873 of September 27, 1916, regarding the 99 Mercantile Tax and suggesting the use of the transit passes by the Standard Oil Company, I have the honor to state that the Standard Oil Company’s branch at Kiukiang has advised this office that they have now bonded their tanks as from November 1, 1916, and will immediately commence shipping under transit passes to inland points.

The Standard Oil Company in a letter of November 1, 1916, states that

“We shall be glad if you would kindly, at your earliest convenience, advise the Legation of this our decision and action, requesting the matter of the 99 Tax be again taken up with the Chinese authorities, with a view to the immediate abolishment of same.”

This, it is thought, is in line with the Legation’s instruction to this office above referred to.

I have [etc.]

Edwin S. Cunningham
[Inclosure 2]

Minister Reinsch to Consul General Cunningham

No. 1964

Sir: The Legation has received and taken note of the despatch (No. 340) of the 3d instant in which you report that the Standard Oil Company’s branch at Kiukiang has advised you of its having bonded its tanks as from the 1st instant and that it will immediately commence shipping under transit passes to inland points, as suggested in the Legation’s instruction of September 27 last (No. 1873) in regard to the 99 Mercantile Tax.

With reference to the company’s request that the Legation again take up with the Chinese authorities the matter of the 99 Tax, “with a view to the immediate abolishment of same,” the Legation has to observe that this seems to indicate a misapprehension that that tax is in itself illegal. The Legation perceives no basis for such an assumption, and it is not prepared to insist that the tax be discontinued save in so far as concerns its misapplication to shipments which have, by the taking out of transit passes, become entitled to exemption from that and other inland charges.

It is desired that you bring this view to the attention of the agent of the Standard Oil Company at Kiukiang and advise him that the Legation looks to the company to furnish it the necessary concrete and definite evidence upon which to base such action as it may find appropriate, in the event that the provincial authorities levy or seek to levy the 99 Mercantile Tax upon consignments covered by transit passes.

I am [etc.]

Paul S. Reinsch