893.841 Surtax/12: Telegram

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

773. Following from American consul general at Shanghai:

“July 27, 4 p.m. For the Senior Minister from the Senior Consul.

With reference to your telegram of July 18, the following reply has been approved by consular body with the exception of consuls general for Japan and Denmark who will communicate their reservations directly to their respective Ministers.
The consular body desire in the first place to emphasize that the utilization of the Shanghai Maritime Customs machinery for the collection of extra-treaty taxes renders it possible for any de facto government controlling this port to impose tariff autonomy at any moment—as the Nanking Government in fact propose to do on 1st September next. The contention that Chinese organizations merely make use of Customs documents to assist them in levying extra-treaty taxes does not accurately represent the fact, which is that the Maritime Customs machinery is used to prevent the movement of foreign ships and cargo until extra-treaty taxation have been collected from them.
One method of rendering any protest against extra-treaty taxation effective would be for the Foreign Minister to inform the Inspector General of Customs that persistence by the Maritime Customs in the present attitude at Shanghai might lead to disruption of the service.
If it is considered expedient to put pressure on the Maritime Customs, the Foreign Ministers might notify the Nanking, Hankow and Peking authorities that unless levying of extra-treaty taxes ceases, foreign merchants will be instructed to pay to the consulates the treaty taxes plus Washington and export surtaxes and that foreign ships and cargo will be protected against any attempts to interfere with them by the Chinese authorities.
The degree of protection to be afforded will involve small guards at the foreign-owned wharves situated outside Settlement limits, some 30 in number, and a patrol by naval armed launches to prevent interference with cargo being handled in the river. The presence of one cruiser at Woosung would suffice to prevent any possible action by the forts there.
The above protection would suffice for ocean-going vessels which do not call at other ports under Nationalist control, but if the above are to include coastal shipping it would appear necessary to provide equivalent protection at, say, Amoy, Swatow and Canton in addition.
Any partial system of this sort can only be partially effective and is only suggested as being less alarming than direct action taken against the offending Chinese Government, which affords of course the only completely effective answer.
In any case it is essential that any action taken should be based on the initiative of foreign governments and should not be left to the discretion of individual merchants.
Only on condition that the Foreign Ministers interested have decided how far they are prepared to go in protection of their treaty [Page 443] rights, we recommend that the consular body here should be authorized to appoint delegates to enter into informal conversations with delegates of the Nanking authorities. The object of these conversations would be to endeavor to convince the Nanking authorities for lack of [apparent omission] on their present policy, to offer to meet them to the limit above mentioned and to tell them quite clearly what action—either payment of agreed taxes to consulates with accompanying protection as suggested above or otherwise form of pressure—will be employed if they persist in the attempt to seize tariff autonomy.”