893.512/767: Telegram

The Chargé in China (Mayer) to the Secretary of State

121. Following from Swatow for the Department’s information:

“February 7, noon. Chinese authorities are levying a 5 percent surtax on all merchandise entering Swatow under the name of a [Page 500] luxury tax. I have informed the local authorities that I consider their action irregular. Shall I make further representations? Standard Oil Company inquire whether they may deposit regular taxes with me in the event that the matter cannot be satisfactorily adjusted with the Chinese.”

The Legation replied:

“February 14, 3 p.m. Your February 7, noon.

Since tax is levied on imports and is, in effect, an extra treaty surtax, you are authorized to protest against it.
Report by radio whether you consider suggested acceptance by you of regular duties practicable in view of conditions obtaining at Swatow as well as the course of action which has been taken by your colleagues.”

Swatow then telegraphed as follows:

“February 19, noon. With reference to your telegram February 14, 3 p.m. Chinese have agreed to levy surtax according to the luxury list published by the Nationalist Government and forwarded to the Legation by this consulate on March 16 last year.41 It is suggested that I should not interfere further in this matter except to prevent discrimination against American interests. This will be a tacit recognition of the legality of the surtax and is the procedure that is followed by my colleagues with the exception of the Japanese consul who is placing every possible obstacle in the way of the authorities. The proposal of the Standard Oil Company that I accept the regular tax is considered impracticable since the tax is omitted on imports which would be promptly seized by the Chinese authorities. This would involve me in an endless controversy with the authorities which could not be decided to the advantage of the Standard Oil Company except by the use of force. It is believed that such action would not be justified, more especially as the goods of the Standard Oil Company, possibly subject to the surtax, would only be petroleum products, otherwise kerosene and gasoline. I cannot conceive of any circumstances under which the real interests of Americans would be served by the disposition of funds to cover legal taxes with the consul without the consent of the local authorities.”

I have replied:

“February 23, 7 p.m. Your February 19, noon.

It would appear inconsistent with the Legation’s attitude towards such taxes for you to give even tacit recognition of legality of the surtax. You should make such protests therefore as will make it clear that we do not recognize legality of this or similar taxes.
In view of your statement Standard Oil Company’s request appears impossible to agree to.”

  1. Apparently not sent to the Department.