893.512/613: Telegram

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

765. Legation’s 756, July 26, 4 p.m. Following from the American consul general at Shanghai:

“July 27, 9 a.m.

1.
The following supplements my No. 96, July 25, 3 p.m.52 The proclamation received from the Ministry for Foreign Affairs of the Nanking Government announces the promulgation of three laws effective September 1st this year, to wit: (a) The law on abolition of internal transit duties, (b) the provisional law on national import tariff, (c) the law on excise duty. Their provisions may be summarized as follows:
(a)
Law abolishing internal transit dues. The following taxes are to be abolished: (1) Likin of all descriptions; (2) all native customs duties whether within or without the 50 li radius of the open ports, or in the interior; (3) all principal and miscellaneous levies on goods in transit; (4) transit dues in lieu of likin; (5) coast trade duty; (6) duty on goods from one Chinese port to another; (7) destination tax (loti shui).
(b)
Provisional law on national import tariff. All imported goods shall, besides the treaty duty of five percent ad valorem, [Page 401] be liable to an additional duty which in the case of ordinary goods shall be seven and a half percent and in the case of luxuries shall be according to classification fifteen percent, twenty-five percent, and for alcoholic liquors and tobacco products fifty-seven and a half percent. Simultaneously the two and a half percent ordinary and luxury surtaxes are to be abolished. Prohibited articles, duty-free articles and specially exempted articles are to be treated in accordance with pertinent existing regulations. The law applies to imports over land frontiers.
(c)
Excise duty. An excise duty is to be levied on all goods manufactured by the Chinese and foreign factories in China employing more than 10 workmen and equipped with electric, steam or hydraulic powered machinery. Rates of excise duty to be the same as corresponding rates of import duty on goods of the same or similar nature and description.
2.
Am reliably informed that it is the intention of the Nanking authorities to collect the new import duties through the medium now employed to collect the import and export surtaxes; that an effort is being made to obtain favorable consideration of a rule to protect commercial contracts entered into on the basis of existing duties; and the abolition of taxes on goods in transit paid to the Maritime Customs will involve a loss of revenue to the Customs which is estimated at Nanking million Haikwan taels per annum and which may seriously impair the ability of the Customs to serve the loans secured on its revenue.
3.
The Nanking Government is putting the abolition of treaties affecting the Customs squarely and definitely up to the treaty powers. If the American Government permits the arbitrary enforcement of these duties and regulations upon American goods and firms, it is certain that Nanking will impose taxes in complete disregard of all treaty rights and without limitation as to the amount and without notice. It is strongly urged that the American Government make a definite announcement to all de facto governments in China that America will not permit Nanking or any other government defiantly to disregard her treaty rights; that at least in important and accessible treaty ports Americans are to be protected in these rights; and that unless the levying of extra treaty taxes ceases, American merchants will be instructed to pay to the consulates, for eventual delivery to the Customs, all treaty taxes plus Washington and export surtaxes and that foreign vessels and cargo will be protected against any attempt to interfere with them by the Chinese authorities. Such announcement, in my opinion, would secure these rights without active use of force but, be that as it may, failure to take some action will be suicidal to the American commercial and industrial interests. I cannot see this entering wedge advanced without expressing the foregoing views with the greatest emphasis and resolve. The initiative should be taken by our Government and should not be left to the discretion of the individual American merchants who are helpless without American Government backing.”

MacMurray
  1. See supra.