893.512/520: Telegram

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

43. My number 27, January 13, 4 p.m.

The first of these mandates is of course of overshadowing importance but I trust there will be an opportunity for me to discuss it with you in person before final action with respect to it becomes necessary.
The second raises an immediate question for decision. We may, on the one hand, either make a futile protest or let the matter go by default; or, on the other hand, we may make the best of a bad matter and at the same time discharge both legal and moral obligations assumed at the Washington Conference by asking the British and other nations to join with us in a declaration such as was set forth in my 598, December 4, 4 p.m.,26 to the effect that we are prepared to agree hereinafter Washington surtaxes to be levied immediately and unconditionally upon our trade by the Maritime Customs throughout China. I am convinced that the latter course is the only practicable means of meeting the situation and of avoiding falling between two stools.
I understand that foregoing proposal has now been accepted by all interested Governments except Swedish and Norwegian (which have not yet given their representatives any instructions) and the Japanese which has taken an adverse position.
With reference to the mandate involving the question of the resumption of the Tariff Conference, it seems to me obvious that the Chinese by dealing unilaterally with’ the questions of Washington surtaxes and of tariff autonomy matters, which the Conference was to determine by the process of mutual arrangement, have wholly destroyed basis for any claim to ask for resumption of Conference negotiations for the purpose of dealing with interim rates or any [Page 374] other remaining questions. To resume meetings would in my opinion result not in any bona fide negotiations but in a situation in which the foreign delegates having already had the major and vital part of the Conference program taken out of their hands would now have to choose between accepting substantially in toto Chinese proposals or being told that these proposals would be put into force unilaterally.
I should personally be the less positive in my views on this matter had I any belief that third mandate concerning allocation of new revenues was other than mere window dressing to make Northerners appear more regardless [regardful?] of China’s obligations than the Southerners have made [been?] The Chinese want all that the traffic will bear and I fear that without the exercise of such pressure as the now vanished prestige of the powers might have brought to bear in October 1925 there is disillusion in store for any who take the mandate at face value and indulge the hopes that trade will be freed from internal taxation or that their acceptances will be paid.
I am furthermore moved by the consideration that if we now consent to deal with the Fengtien party as the Government of China, for the purpose of arranging for new revenues beyond those which [apparent omission] we shall expose ourselves to certain attack by the Southerners on the ground that we are gratuitously and with malice prepense assisting North to crush South through providing North with the bulk of the sinews of war. We would thus bring upon ourselves the same kind of denunciation with which South greeted recent British proposals and we would have but little valid defense.
Three mandates have now been transmitted to various Legations with an accompanying note in which it is stated that in view of the failure of the Special Conference to reach any definitive agreement with regard to tariff autonomy and the levying of the surtaxes there is no alternative but for the Chinese Government to declare on its own initiative that the national customs tariff will be enforced and the Washington surtaxes be levied as from the dates specified. The note however contains no invitation for a resumption of the Conference for the purpose of discussing “interim rates”.
I am of the opinion that this arbitrary action should not be countenanced by any recognition such as would be implied in a proclamation agreeing to the levying of the surtaxes from any specified date but that the situation may best be met by similarly unilateral action on the part of the powers in which, through individual notes, they should signify their assent as above suggested to the immediate and unconditional levying of the surtaxes upon the trade of their nationals through the Maritime Customs. I am informed however that the British will make definite reply to the note accepting levy of surtaxes. [Page 375] It appears certain that the Japanese will not approve of the levy of surtaxes but in this they will probably be alone. The attitude of the Japanese is puzzling in view of the fact that the collection of the surtaxes is inevitable, but it may be dictated by domestic political considerations arising from pressure exerted by Japanese mercantile and financial interests.
With regard to classification of luxuries to bear five percent surtax, it has been intimated to me that the Chinese intend to make a very inclusive list such as they originally proposed in the Conference. British Minister is recommending to his Government that an effort be made to induce the Chinese to accept list of luxuries tentatively agreed upon in the Conference but never made effective by reason of failure to reach an agreement with regard to any surtaxes.
Interested Ministers meet to discuss foregoing matters on the 20th and I request, if possible, expression of the Department’s attitude by that date.