893.512/595: Telegram

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

698. Your 270, July 1, 5 p.m.

1. Following from American consul at Shanghai:

“Senior consul has just received notification from Superintendent of Customs in his new capacity as ‘Director of the Surtax Revenue Department’ stating that beginning July 10, surtax will be collected on incoming passengers’ baggage and on imported luxuries which [Page 393] are enumerated in a lengthy list, copy of which is being mailed to the Legation immediately. Such list of luxuries as promulgated by Finance Department of Nanking Government under date of June 28th is of great volume so it is not quoted here but it is believed in general to be practically the same as list of luxuries presented for consideration of Tariff Conference in Peking in 1925–26.

The Chinese authorities appear determined to obtain revenue from every possible source and C. C. Wu,45 in conversation at private dinner party, informed me that likin is to be abolished on August 1st, the land tax being made in future a provincial tax as substitute for likin while there will be a uniform ad valorem duty of 15 percent on general imports and from 30 percent upward on luxuries. However, list of luxuries subject to surtax and official notification relative thereto fails to state rate of such surtax but Wu has promised to supply me in immediate future with list of all contemplated taxes and Legation will be promptly advised upon receipt of more definite information by this consulate general. It is generally understood that Wu contemplates putting such a scheme into effect at an early date, probably with the briefest possible warning. If schism between Nanking and Wuchang is genuine then it appears that an attempt is being made to collect from Shanghai sufficient revenue to compensate for that formerly supplied by Moscow through the Hankow Government.”

2. I am of the opinion that the imposition of this extreme taxation, which is equivalent to a denunciation of the whole treaty system as regards tariff matters, should not be passed over without a protest, even if such protest is productive of no result; and I am considering the most effective way in which such protest could be made.

  1. Minister for Foreign Affairs in the Nationalist Government at Nanking.