The Secretary of State to the Minister in China (Schurman)
Sir: The Department has received your despatch No. 1589, of June 4, 1923,7 relating to the controversy between the Powers and the Chinese Government whether transit passes free the goods covered thereby from “all further inland charges whatsoever”, as stated in the English text of the Japanese Treaty of 1896,8 or from charges in transit only, as asserted by the Chinese Government. In view of the general failure to obtain redress in claims arising from this cause, and of the fact that the British and Japanese Legations have practically abandoned their efforts to obtain exemption from destination taxes of imported goods covered by transit passes, you suggest that the Legation be instructed to discontinue its protests to the Chinese Government on this subject. You also suggest that the matter might be brought up at the Special Conference on the [Page 592] Chinese Tariff as an instance of the failure of the Chinese Government rightly to interpret and enforce treaty stipulations regarding taxation.
While the Department fully appreciates the difficulties which the Legation has encountered in dealing with this question, it believes that it would be unwise to make a change of policy in the period intervening before the meeting of the Special Conference. The subject is one which must be considered in detail by that Conference; and it is thought preferable that the position of this Government should appear at that time as having been invariably opposed to taxation of this character. It is, accordingly, suggested that you continue as hitherto to file with the Chinese Government protests against the imposition of destination taxes in such cases as are brought to your attention.
I am [etc.]