893.6363/62: Telegram

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

131. My 10, January 7, 3 p.m.

American consul general, Canton, has transmitted information obtained from Standard Oil Company and representative there and understood to be confidential to the effect tentative agreement for the resumption of business has been worked out in detail subject to confirmation by company’s head office in New York as well as by Canton Government. The plan does not contemplate a monopoly nor action by company as agent of Government; nor any signed agreement or undertaking on the part of company. The undertaking if actually arrived at apparently will be that Canton Government will issue regulations for importation and distribution of oil providing for internal revenue tax; that immediately after promulgation of regulations, company will resume sale of oil to be taxed by local authorities as it leaves company’s warehouses. Tax will of course fall upon Chinese consumer and not American company although it will be a gross violation [Page 1096] of existing treaty rights (see Canton’s despatch No. 387, February 18, to the Legation; copy to the Department.95
While conscious of the difficulties of the American oil trade in Kwangtung and prepared to support any proper measures for its relief, I cannot but consider that it would be extremely regrettable if such representative American interests were to compound with the Canton authorities in disregard of treaty provisions by an arrangement which would undermine constant efforts of our Government to prevent illegal taxation of American trade in China. The Legation’s position in endeavoring to protect American business interests from unlawful restrictions and exactions is compromised whenever those interests enter into arrangements recognizing those restrictions. I venture to suggest that this matter be taken up with the Standard Oil Company in the sense of the foregoing.
  1. Not printed.