Memorandum by the Counselor of Legation in China (Peck) of a Conversation With the Chinese Minister of Finance (Soong)95

Mr. Peck said that he was informed that Department of State officials had mentioned to Mr. Soong when he was in the United States the matter of the restrictions placed by the Canton authorities on the sale of oil by American and other foreign firms. He inquired whether Mr. Soong had been able to look into this matter since his return to China.

Mr. Soong said that, to speak quite frankly, the National Government was unable to control the action of the Canton regime in this regard. He said that the case was simply that various militarists, like General Chen Chi-tang, owned private oil refineries, from which they expected to make a fortune. What they had done at Canton was an attempt to reserve the market for these private refineries. However, other Chinese refineries were competing with these specially privileged ones and now the Canton regime had devised a new expedient, namely, the imposing of a tax of Silver $3 per unit on refined kerosene.

Mr. Peck said that he had seen a report of this in the newspapers in the last day or two.

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Mr. Soong said that the plan was to levy this tax on all and sundry and then give rebates to the specially privileged factories.

Mr. Peck observed that it was clear that if the National Government could do anything to control the oil situation in Canton, it would do so, if only to protect its own revenue. Mr. Peck observed that the National Government had not been able to impose its additional tax on crude oil imported for refining purposes. Mr. Peck remarked that a great deal of negotiation had been going on between the foreign companies at Canton and the authorities there. The Foreign Office in Nanking had been very helpful in this regard. It now looked as though an arrangement might possibly be made whereby the foreign companies would sign applications for registration with the Canton authorities, provided certain objectionable details, such as limitation of output, etc., could be eliminated.

Mr. Soong seemed to believe that no arrangement would be possible which would not ultimately be manipulated in favor of the oil refineries owned by influential persons in the Canton regime.

  1. Copies of memorandum and of the Counselor’s covering despatch No. L–30 Diplomatic, October 4, to the Minister in China, were transmitted to the Department without covering letter; received November 4.