893.512/667: Telegram
The Chargé in China (Mayer) to the Secretary of State
[Received September 10, 1927—10:16 a.m.]
868. Legation’s 838, August 29, noon.
1. Following from the American consul at Shanghai:
“September 9, 2 p.m. Referring to my telegram of August 27, noon. The decisions are being construed to apply to all nontreaty taxes. Tobacco products and wines arriving in British vessels are being delivered by British godown keepers to British consignees after the treaty import duty plus wharfage and conservancy dues plus the so-called Washington surtaxes have been tendered to and refused by the Customs bank and deposited with the British consulate general. Delivery is made upon presentation of the shipping documents endorsed by the British consulate general to show deposit of duties and dues and can be effected only before cargo is placed in bonded godown, that is, within fourteen days after arrival; the court decision did not reach case of this kind in bonded godowns, which are under the joint control of the godown keeper and the court. Similar procedure is followed by the Japanese who, however, under their court decision are not required to tender or deposit the surtaxes but only the treaty import duty and wharfage and conservancy dues.
“Since the British court decision, the British godown keepers have agreed to release cases of this kind if the consignee is a subject of an extraterritorial treaty power, provided the shipping documents are endorsed by the British consulate general. The British consulate general will endorse the documents if there is attached thereto a copy of a letter addressed by the consul of the consignee’s nationality to the Commissioner of Customs stating that in view of the refusal of the Customs bank to accept the amounts due on a specific cargo mentioned on the duty memorandum, the money has been deposited in the consignee’s consulate, where it is held at the disposition of the Commissioner of Customs. Japanese godown keepers are prepared to release cargo under similar circumstances and upon the same conditions except that, in view of the decision of the Japanese court, the consignee need not deposit the surtaxes.
“The Tobacco Products Company have requested me to accept on deposit the treaty duty, wharfage and conservancy dues and Washington surtaxes so that they may obtain delivery, in the manner described above, of cargo recently arrived in a British steamer and stored in a British godown. They were informed that this was impossible under the Department’s instructions.
“Longfellow and Adams, an American firm, have filed suit in the United States Court for China against the Robert Dollar Company, demanding that the Dollar Company release cargo on which the treaty duty, wharfage and conservancy dues, and Washington surtaxes have been tendered to and refused by the Customs bank. This suit affects cargo consigned to an American firm, imported in an American vessel, and stored in an American godown. The court’s decision is expected tomorrow.
[Page 409]“The Tobacco Products Company desired that it be pointed out that their inability to deposit with the consulate general the treaty duty, wharfage and conservancy dues, and Washington surtaxes which have been or may be tendered to and refused by the Customs bank places an impossible handicap upon them as they will be obliged to pay an additional fifty percent import duty which their British competitors do not pay. All other American and Philippine tobacco companies are faced with same difficulty.
“Permit me to point out that while the clearance of wines is of no great American concern, it is a serious matter to the tobacco growers and manufacturers of the United States and the Philippine Islands that their products should be subjected to the fifty percent discriminating duty. Permit me further to observe that if the decision of the American court is the same as those of the British, French and Japanese courts, failure to make provision for the deposit with the consulate general by importers of legal duties, as indicated above, will operate to prevent shippers from despatching tobacco products and wines to Shanghai by American steamship lines because import duties thereon will be, respectively, fifty and thirty percent greater than when shipped by other lines. Local importers in self-defense are already diverting all such shipments to Japanese, British and French steamers, and I am informed that the diversion is not alone of wine and tobacco shipments but also of general cargo, for reasons which are obvious. A general increase of import duties, such as has been recently threatened, would undoubtedly result in a wholesale diversion of Shanghai cargo from American to other steamship lines.
“I am not unmindful of the Department’s instructions embodied in the Legation’s telegram of August 1, 7 p.m., but at the request of American importers and in view of the serious discrimination against American firms and shipping this is considered a matter which should be brought to the attention of the Department for its information and consideration. The Department, in issuing the instructions referred to, evidently had in mind the possible effect of clearance of vessels by consular clearance only, while the present action is an effort to combat nontreaty duties after the court has decided that cargo is illegally detained. In asking that they be allowed to deposit with the consulate general, to [for?] the disposition of the Customs, all legal duties, wharfage and conservancy dues, and Washington surtaxes, American merchants and shipping companies consider that they are seeking only the same facilities that are being enjoyed by competitors of other nations.
“There remain of the illegal taxes only the tobacco products tax reported in my telegram of June 30, 4 p.m.,55 the wine tax reported in my telegram of August 16, 3 p.m., and the coal tax.”
2. The court’s decision will be transmitted as soon as received.