893.512/1025: Telegram

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

374. Department’s No. 278, July 7, 1 [2] p.m., 1927,7 last sentence, and Department’s mail instruction No. 1463, January 30, third paragraph.

Private arrangement made by the oil companies and National Government provides that the import duty payable upon importation of kerosene and gasoline into China shall cover all inland taxation.
Transit passes covering such cargo and exempting goods from all taxation in transit are now being issued by the customs gratis. In issuing transit passes without charge, it is possible that the Chinese Government hopes both to make it more difficult for insurgent local governments to collect taxes upon goods in transit and at the same time to reduce the amount of rebates which might be due the oil companies in compensation for such unauthorized taxation.
Gauss8 reports that military tax officers in northern Honan and a special kerosene tax office at Chengchow are imposing taxes on all kerosene and gasoline shipments. Does the Department feel that basis exists for protest by the Legation to de facto Northern authorities?
For the Minister:
  1. Foreign Relations, 1927, vol. ii, p. 393.
  2. Clarence E. Gauss, Consul General at Tientsin.