393.1152/15
The Secretary of State to the Minister in China (Johnson)
Sir: The Department has received the Legation’s despatch No. 403 of August 15, 1930,3 with regard to reported attempts of the Chinese military authorities in northern Honan to extort forced loans from Chinese agents of an American company engaged in the sale of kerosene.
It would appear from the enclosures to the Legation’s despatch that loans of the sort indicated were demanded only from Chinese agents engaged in selling kerosene; that the alleged security for the loan consisted of consumption tax stamps; and that the stamps thus given as security could not be used on untaxed merchandise then held in the warehouses of the Chinese agents. Moreover, the correspondence between the Legation and the Consulate General at Tientsin would indicate that both of these offices recognized the strong probability that forced loans of the sort under discussion were imposed in a manner discriminatory against agents of foreign concerns.
Although the Legation has taken the stand that no real basis exists for the formulation of a protest, the Department believes that it should be borne in mind that forced levies of this sort against the Chinese agents of American companies, whether or not imposed in a discriminatory manner, would, if they were to be indefinitely continued, undoubtedly prevent the carrying on of business relations entered into between the American company and its agents in the interior. This would appear to constitute a new limitation and impediment, freedom from which was guaranteed to citizens of the United States engaged in the purchase or sale of goods of import or export by Article XV of the treaty between the United States and China of 1844.4 Other treaty provisions which appear pertinent to the case under discussion are those contained in Article VIII of the Sino-American Treaty of 1844; Article XVII of the Sino-American Treaty of 1858;5 Article XIII of the Sino-British Treaty of 1858;6 and Article V of the Sino-Netherland Treaty of 1863.7
[Page 983]It does not appear that any further action is necessary either on the part of the Legation or the Consulate General at Tientsin in the particular case under reference, but, in future cases of a similar nature, it is suggested that the Department’s observations as set forth above be considered.
Very truly yours,