393.1153 Texas Co./11

The American Legation in China to Marshal Yen Hsi-sharis Diplomatic Bureau at Peiping 25

Memorandum

The American Legation presents its compliments to the Diplomatic Bureau and has the honor to state that 5,800 cases of kerosene and gasoline, shipped to Shansi by the Texas Oil Company, an American firm, are being detained by the Kerosene Tax Bureau in Tsinghua, Honan, for payment of a kerosene tax.

The American Consul General at Tientsin telegraphically requested the Chairman of the Honan Provincial Government on July 28, 1930, to instruct the tax office at Tsinghua to release the cargo, inasmuch as it was in transit to Shansi and covered by transit passes.

In its telegraphic reply of August 16, 1930, the Provincial Government stated that this matter had been referred to the Bureau of Finance and quoted that department of the Provincial Government as follows:

“Transit passes were adopted under the unequal treaties. In the 16th year of the Republic (1927) the Provincial Government decided upon their abolition and issued a circular instruction to the effect that any foreign or Chinese merchant who has made a shipment to Honan under transit passes must pay the prescribed taxes in order that the shipment may be released. This requirement has ever since been complied with, as is on record.

“The shipment of kerosene and gasoline of the Texas Company was made under the same conditions and the transit passes cannot, therefore, be considered as effective.

“It is requested that the American Consul be telegraphically advised to direct the oil company to pay the tax in accordance with the regulations.”

The Provincial Government added that this statement had been confirmed on examining the archives, and requested that the Texas Company be instructed to pay the tax.

In this connection, reference is made to considerable previous correspondence on the subject of gasoline and kerosene taxes in Honan, [Page 286] and in particular to the American Legation’s memorandum of June 7, 1930,27 in which it was pointed out that shipments covered by transit passes issued by the Chinese Maritime Customs were not legally subject to further inland taxation.

The Diplomatic Bureau was good enough to bring this matter to the attention of His Excellency, Marshal Yen Hsi-shan, and as a result cargo covered by transit passes has been moving freely through Honan. The detention of this shipment of the Texas Company is, therefore, surprising, as is the position assumed by the Provincial Government with respect to transit passes in general.

With a view to effecting the release of this shipment of the Texas Company and satisfactorily adjusting the question of the exemption from taxation of transit pass cargo, the American Legation would urge that this matter be referred again to His Excellency, Marshal Yen Hsi-shan, with the request that the necessary instructions be issued to the Provincial Government of Honan.

  1. Copy transmitted to the Department by the Minister in China in his despatch No. 419, August 25, 1930; received September 24.
  2. Not printed.