893.512/599: Telegram

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

720. My 708, July 9, noon. Following from American consul general at Shanghai:

“70, July 9, 6 p.m.

The following duties and surtaxes are being levied on imports and exports at Shanghai:48 [Page 396]
The five percent or other duty provided by treaty;
On so-called luxury articles a further surtax of two and one-half percent, imposed by the Nanking Government, collected by the Surtax Revenue Department at Shanghai, and effective from July 4, 1927; it is this new luxury surtax of the Nationalist Government, as well as a large number of proclaimed and contemplated taxes at rates, against which the American Chamber of Commerce wishes to protest. My telegram number 66, July 6, 6 p.m., requested instructions as to the attitude to be adopted by American firms with respect to the payment of this tax.
On imported coal the special coal tax of 6 cents per picul or $1.08 per ton imposed by the Financial Commissioner of Kiangsu Province, approved by the Nationalist Government, and effective from July 1, 1927; and
On imported cigarettes and tobacco the tobacco tax of fifty percent ad valorem, imposed by the cigarette and tobacco bureau for Kiangsu Province, approved by the Nanking Government, and effective from July 1st, 1927.

Subparagraph number 2 on exports: (a) The five percent or other duty provided by treaty; and (b) a surtax amounting to one-half of the existing customs export duty, imposed by the Nanking Government, collected by the Surtax Revenue Department, and effective from July 1st, 1927.

My telegram No. 65, July 5, 6 p.m., reported that C. C. Wu had told me that the Nanking Government proposed to abolish likin from August 1st, 1927, and to adopt a new ad valorem tariff of fifteen percent on ordinary imports and thirty percent and upwards on luxuries. These intentions appear to have been modified. In the course of a speech at a luncheon given by him yesterday to foreign correspondents and local newspaper editors Wu announced that likin would be abolished from September 1, 1927, and a national tariff put into effect ‘18 months from now.’ He said that in the interim (presumably between the abolition of likin and the adoption of the national tariff) the loss of revenue is to be compensated for by raising the Customs duty to twelve and one-half percent on ordinary goods and that for goods classified as luxuries a graduated scale will be adopted. Any further information I may be able to obtain with respect to these proposals will be communicated promptly to the Legation.
As affecting the increased municipal rates it may be stated that the municipal contract for coal for lighting and other purposes is approximately 400,000 tons of coal per annum. The imposition of the coal tax alone will provide a revenue far in excess of the amount derived by the municipality from the two percent increase in the house rate. If these various surtaxes continue to increase, the municipality must necessarily increase the rates to meet the large amount paid in surtaxes and increased duties.”

For the Minister:
  1. No paragraph (b) in original.