The Secretary of State to the Minister in China ( MacMurray )
Washington , July 12, 1927—3 p.m.
283. Your 708, July 9, Noon.
- The arbitrary levying by local authorities of taxes upon foreign trade in violation of the terms of existing treaties has been encountered in widely separated parts of China as described in paragraph 3 of your 116 of February 7, 9 a.m. Department indicated to you by its telegram No. 71 of February 24, 5 p.m., its readiness tacitly to acquiesce in the imposition by the Peking authorities of surtaxes equivalent to the so-called Washington surtaxes. In connection with the proposal of the Nationalist authorities at Hankow to impose a stamp tax, reported in your telegram No. 217 of March 14, 8 p.m., Department approved your action in instructing the American Consul General at Hankow to advise interested Americans that the Legation did not feel warranted in protesting against the collection of said taxes in the absence of any discriminatory features. The Department has also indicated to the Legation in its telegram No. 227 of May 20, 5 p.m.,50 that it would raise no protest against the imposition by the Peking authorities of an additional [Page 398] tonnage tax on American shipping for the purpose of raising revenue to support the Chinese foreign service abroad as reported by your telegram No. 551 of May 13, 1 p.m.51 In this matter you stated that assent would be conditional upon agreement on the part of the South not to make the collection of this tax by the North the occasion for hostile action in territory controlled by the Nationalists. Department has not been informed as to whether this tonnage tax has been actually imposed or not.
- The Department has given careful consideration to your statement that “the time has come when an unequivocal announcement of our determination not to forego our rights unless and until they may have been modified by mutual consent should be made in behalf of our Government,” and has read with care the draft announcement which you suggest will serve the purpose of an “authoritative protest against the illegal exactions being put into force against our trade” and have the “future value of giving definiteness to the various enunciations of our Government’s policy with respect to the revision of the so-called unequal treaties.”
- After careful consideration of this proposed statement, and of the facts outlined in paragraph 1 above, the Department is not persuaded that such a statement in the name of the Government is advisable at this time because of the following consideration. Such a statement could be interpreted only in one of two ways, either that this Government intended to force compliance with the existing treaties on the part of the several de facto Chinese governments (which the Legation knows from Department’s No. 61, of February 15, 4 p.m., that it does not intend to do), or that this Government is prepared forthwith to commence discussions with the de facto authorities at Nanking looking to the legalization of its decrees regarding taxes on Americans and their trade by the negotiation of new treaties (which the Department is not prepared to do as it is not convinced that the Nanking authorities are either in control of China or sufficiently representative of the Chinese people to bind them in the observance of new treaties).
- The Department feels that the interests of American citizens and American trade will be better served if we proceed in the manner which has been followed in the past, namely, when protests are considered advisable, by filing formal protests locally with de facto authorities through our consulates, our merchants being advised, where compliance with the local tax regulations is necessary to the continuance of their business, to pay such exactions under protest. The Department believes that such protests invariably should be based [Page 399] on one or more of the following two grounds: (1) that the tax is contrary to existing treaty; or (2) that the tax discriminates against an American citizen or his interest.