893.512/608: Telegram

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

748. 1. Legation’s 692 [691], July 3, noon, and 708, July 9, noon. Following from American consul general at Shanghai:

“July 19, 5 p.m. Several American tobacco companies have large cargoes of cigarettes on local docks awaiting import, Chinese surtax bureau having refused tender of five percent surtax and demanding fifty percent surtax. American companies liable to heavy loss storage charges and request definite statement of American Government in reference to this fifty percent cigarette tax as separate and apart from all other surtaxes. Does paragraph 4 of Legation’s urgent 94, July 14, 4 p.m., apply to the fifty percent tax as well as to minor surtaxes? Am informed British American Tobacco Company is entering all import cargoes in bonded warehouses thereby deferring payment of any import surtax pending definite decision. American companies will appreciate prompt and definite advices.”

The Legation’s July 14, 4 p.m., paragraph 4, transmitted to Shanghai the Department’s 283, July 12, 3 p.m., paragraph 4.

2. In accordance with my instructions Cunningham has not as yet filed protest with regard to new tobacco taxes. If your reply indicates that the Department’s attitude toward cigarette tax is the same as toward other surtaxes (other than so-called Washington surtaxes) and that the Department’s 283, July 12, 3 p.m., paragraph 4, is to apply to the fifty percent tobacco tax I purpose to instruct Cunningham to file formal protest.