893.512/542: Telegram

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

116. Your telegram No. 23.28

The draft declaration proposed in the Legation’s telegram No. 58, January 21, noon., was drawn up on the assumption that all powers except Japan would be prepared to subscribe toward means [Page 380] of immediately and unconditionally putting into effect Washington surtaxes. When at the diplomatic body meeting of January 27th it became apparent that our Government was not at that time prepared to take this position, there was general disposition on the part of the French and other less interested nationalities to let whole question go by default, tacitly letting surtaxes be imposed. Unless the British should succeed in once more lining up the less interested governments, it is quite unlikely that any such declaration as was contemplated can be made and in that case it would no doubt be advisable for us to acquiesce tacitly in the surtaxes, reported in my 27, January 13, 4 p.m., avoiding either a futile protest [apparent omission] which would merely antagonize both the South and Japan without bringing us any nearer to the fulfillment of our obligations under the Washington Treaty. The differences of viewpoint among the powers are at any rate beyond any possibility of adjustment. (Your 7th paragraph.)
In my opinion the Japanese proposal to resume the Tariff Conference with a Chinese delegation in which the North and the South would be represented (8th paragraph) “is not” politics. Even if they could sink the animosities of their life and death struggle, both sides are now equally convinced that they are in a position to take what they want from the powers without asking and would see no advantage to be derived from combining for the purpose of negotiations that would merely involve restrictions or conditions upon their ability to act wholly without regard to any obligations under the Washington and other treaties. Though the Peking authorities have of late indicated vaguely a wish to resume the conference with them, that has been only with a view to legalizing ex post facto their own arbitrary imposition of surtaxes for the purpose of making them a better security for loans.
I must very regretfully report that with the recent offer of the British Government to subject its nationals to the Chinese regime in all matters of taxation (see British memorandum of January 19th29 quoted in your telegram No. 17, January 20, 4 p.m.30), with the Peking Government’s imposition of surtaxes (my number 27) and with the attack upon the integrity of the Maritime Customs Service inaugurated by its brusque dismissal of Aglen31 for not consenting to serve the interests of particular faction within the Northern group (my telegram No. 104, February 1, 5 p.m.32) we have arrived at a point where we are helpless in all matters relative to the taxation of foreign trade. Both North and South have definitely broken away not only from the “old” treaties but from the Washington [Page 381] Customs Treaty as well. Protests against treaty violations are bound to be fruitless; and foreign commerce will henceforth have no safeguards against the arbitrary exactions of the local authorities along the line from point of landing to destination. For example, in Kwangtung there has already been established provincial tax in addition to import duty and surtaxes and to likin; in Mukden the authorities have declared the system of exemption certificates inapplicable for the whole of Manchuria, thus nullifying in this respect the status of open ports in Manchuria; in Shantung, the two and one-half percent surtax on imports is being collected from February 1st in addition to the similar “goods” tax on both imports and exports which has been levied in that province since October; in the Chahar district, consignments are admitted only under special permits from the Governor for which no fixed scale of charges is made and for which no receipt is given against payments; in Peking, the Cabinet is reported recently to have given to favored Chinese company exemption from all inland and coastwise duties.
The old Canton system of monopolies and special privileges and of artificial restrictions upon foreign trade is rapidly building itself up again now that safeguards of the treaties have been overridden. I fear the time for protests and the time for action have gone by and that there is nothing for it but to let the Chinese—at the cost of great loss to their interests and to our own—learn by experience that that system is economically unsound and unworkable in the modern organization of the world.
In the absence of something concrete and positive means of meeting this situation I see no alternative at the present time but to bow to the storm and accept with what grace we may the fact that our trade is now absolutely without such treaty protection in China as it has in most other countries despite the fact that it is here subject to an infinity of restrictions and exactions which, so far as I am aware, are known in no other country, with the result that in spite of low tariff rates at the point of landing a great proportion of our imports pays total charges far in excess of those provided for under the tariffs of any other country.
  1. January 24, p. 377.
  2. Ante, p. 344.
  3. Not printed.
  4. Sir Francis Aglen, Inspector General of Chinese Maritime Customs.
  5. Post, p. 457.