693.116/105: Telegram

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

816. Legation’s 799, October 17, 10 a.m.

1.
Following from American Consul General Canton to the Legation and Nanking:

“October 24, 6 p.m. My October 14, 6 p.m.

[(1)]
Yesterday I received from the Inspector General a letter quoting the Reconstruction Bureau’s reply to the proposals contained in my letter September 15th. The authorities refuse to accede to our request for a revision of the registration application form maintaining that their requirements are not in conflict with treaty rights and that to make special requirements for foreign firms would constitute discrimination in their favor. In regard to the capital tax, it was stated that there is no intention of imposing any taxes upon foreign oil companies but only upon retailers of imported and locally refined kerosene, thus ignoring representations which are made to Commissioner of Finance regarding assurances given by Central Government.
(2)
Yesterday afternoon British Consul General and I called on the Inspector General and told him that we found it difficult to interpret the spirit of the note and suggested that the necessity of revising the application form, as we had proposed, might be obviated if we could obtain an exchange of notes confirming our understanding that ‘the Chinese authorities agree that they will not enforce against American firms, laws and regulations incompatible with treaty rights.’ We proposed to embody in the note also a statement reserving the right to make representations as a separate issue regarding the question of collecting from retailers an additional tax on imported kerosene.
(3)
We left a draft of the proposed exchange of notes with the Inspector who promised to refer it to the Reconstruction Bureau and we explained that we must refer this to our Legations for their approval before disposing of the question of registration in this way.
(4)
The Inspector also informed us that he had just received a telegram from the Foreign Office to take up with the Finance Commissioner the question of tax upon imported oil.
(5)
I believe that if the proposed exchange of notes can be effected it will enable the foreign oil companies to resume business. As the authorities have orally assured me that there is no intention to [Page 590] restrict output it is no longer essential to provide specifically against it. Repeated to the Legation and Nanking.”
2.
Following instruction has been sent to Canton and Counselor of Legation at Nanking has been informed:

“October 27, 2 p.m. Canton’s October 24, 6 p.m. As you believe that foreign oil companies may thereby be enabled to resume business, the Legation approves exchange of notes suggested in your paragraph 2. However, provided no delay or embarrassment will [ensue?], the Legation suggests revision of wording to read ‘will not attempt to enforce.’[”]

Johnson