493.11 Socony Vacuum Corp. No. 17/24

Memorandum by the Minister in China (Johnson) of a Conversation With the Chinese Political Vice Minister for Foreign Affairs (Hsu Mo)79

I brought to the attention of Dr. Hsu Mo our exchanges of correspondence in regard to the difficulties experienced by American firms during the past year in respect of the confiscation of American property by the Customs, which has declined to abide by the Rules of 186880 and has denied to the American firms the right of a formal hearing of their claims. There were cited in this connection the case of the confiscation of a cargo of Socony kerosene at Lungkow, Shantung and the difficulties experienced by Frazar, Federal Incorporated, [Page 627]at Tsingtao, growing out of an alleged fraud on the Customs committed by a Chinese employee of that firm in collusion with an employee, or employees, of the Customs House in Tsingtao.

I stated that the American Government’s position had been clearly set forth in its several despatches to the Ministry of Foreign Affairs,81 it being held that the Rules of 1868 are still applicable to such disputes, although the American Government is prepared to discuss with the Chinese Government a revision of those Rules.

In reply Dr. Hsu stated that his Government’s position in regard to the Rules of 1868 is definite and that they consider them no longer in effect since in the Sino-American Tariff Treaty of 1928,82 China was given tariff autonomy in regard to rates of duty on imports and exports, drawbacks, etc., and “any related matters”. Dr. Hsu stated that the Rules of 1868 were to his mind clearly superseded by the words “any related matters”.

I observed that the points of view of the two Governments were obviously directly opposed and then proceeded to point out the injustice which had been done the Standard Oil Company and Frazar, Federal Incorporated, by the arbitrary action of the Customs Houses at Lungkow and Tsingtao, respectively, these being two of a number of cases in which reputable American firms were accused of violation of Customs rules and then, without being permitted to present their cases to an impartial board as provided by the Rules of 1868, suffered the confiscation of their property.

I then read to Dr. Hsu extracts from the memoranda describing these two cases, Dr. Hsu appearing rather impressed with the failure of the Chinese authorities to accord any hearing to the American firms. I pointed out that under American Customs law, importers had the right of a hearing, not only in respect of alleged violation of Customs’ rules but in regard to rates of duty, etc. Dr. Hsu inquired as to whether these courts were a part of the judicial system or of the Customs organization and was informed that they were a part of the Customs administration. He observed that the Legation, in its notes, had referred to these Customs courts as existing in a number of different countries, and said that he was now seeking confirmation of such statement. In reply I said that I was at this time discussing matters which rested with our two countries irrespective of the practice in other countries and I considered that an injustice was being wrought to American firms by arbitrary action on the part of the Customs, which denied the American parties concerned any hearing in court.

Dr. Hsu stated that he could definitely inform me that the Chinese [Page 628]Government considers that the Rules of 1868 were abolished by the Sino-American Tariff Treaty of 1928, but that the matter of Customs’ practice in matters of confiscations, etc., had already been discussed by him with the Chinese Customs authorities with a view to the possibility of providing for hearings of cases of this sort, if such measures appeared practicable in China.

Dr. Hsu said that from what I had said the two cases appeared “bad” ones; that he would more thoroughly examine them and further discuss with the Customs administration its methods for handling such cases, and that he hoped that he would have some definite information concerning them by the time I returned to Nanking early in December.

  1. Clarence J. Spiker, First Secretary of Legation, was also present. Copy of memorandum was transmitted to the Department by the Counselor of Legation in his despatch of November 17 from Nanking; received December 18.
  2. For text of “Rules for Joint Investigation in Cases of Confiscation and Fine by the Custom House Authorities,” see William Frederick Mayers (ed.), Treaties Between the Empire of China and Foreign Powers (Shanghai and London, 1877), p. 216.
  3. None printed.
  4. Signed at Peking, July 25, 1928, Foreign Relation, 1928, vol. ii, p. 475.