393.1152 St 2/–

The Minister in China (MacMurray) to the Secretary of State

No. 624

Sir: I have the honor to inform the Department that one outgrowth of the disturbances which have taken place in China during the past few years is that it has become customary for Chinese military [Page 732] leaders to levy contributions or forced loans from the various Chinese merchants doing business in the territory which they occupy. These contributions may be levied when a military leader first enters into occupation of a new territory, when he is about to leave the territory, or during the course of his stay there. The time of levy and the amount levied depend entirely on the financial needs or rapacity of the military. A procedure quite frequently resorted to in making a levy is to ask the local Chamber of Commerce for a lump sum and the latter then proceed to apportion it themselves among the merchants who are forced to make up the sums demanded by fear of looting by soldiers or other evil consequences. The particular phase of this matter to which I desire to invite the Department’s attention is the inclusion in this levy of Chinese firms acting as selling agents of American companies, notably the Standard Oil Company of New York. This Company has selling agents in practically every town in China of any importance, and they are with increasing frequency forced to pay these contributions. There is transmitted herewith a copy of a despatch No. 96, of May 15, 1926, from the American Consul at Chungking,38 in which he refers to a levy of $100 on the agent of the Standard Oil Company at K’aihsien. This levy was made in the name of the “Mei Foo Hong”, which is the Chinese name of the Standard Oil Company. Mr. Adams requests the instructions of the Legation as to whether he should

In my opinion a forced loan or contribution made in the name of a like nature pending.

In my opinion a forced loan or contribution made in the name of the Standard Oil Company from its Chinese agent is in fact a levy on the business of the Standard Oil Company, regardless of whether or not the latter reimburses its agent for the amount which he has been forced to pay. On the other hand if a levy were made against the Chinese agent in his personal capacity or a levy were made on the general business done by him including that of selling agent for the Standard Oil Company, then I should consider that it was not within the province of the American Consular authorities to enter a protest against it. In the former case, however, I believe that a right of protest exists.

I have the honor to request the instructions of the Department for my guidance in dealing with this and similar cases which may arise in the future, particularly as to whether the Department considers that a protest should be made against levies of this sort on Chinese agents of American firms doing business in the interior.

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There is transmitted herewith a copy of my instruction to the American Consul at Chungking,39 stating that the question raised by him has been referred to the Department.

I have [etc.]

J. V. A. MacMurray
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