893.6363/128
The Minister in China (Johnson) to the Secretary of State
[Received May 4.]
Sir: I have the honor to enclose a copy of the Hankow Consul General’s despatches to the Legation No. 41 of February 11, 1935, No. 48 of February 16, 1935, and No. 56 of February 28, 1935,63 regarding the institution of what appears to be a form of monopoly for the sale of kerosene in Kiangsi Province through the formation of various District Cooperative Societies.
It appears that in connection with the bandit suppression campaign in Kiangsi Province it was found desirable to institute certain restrictions and restraints upon the transportation and sale of kerosene, and that now, even though the conclusion of the bandit [Page 776] suppression campaign has been officially announced, there are indications of an intention to retain the same hindrances upon the trade in kerosene.
Although the Standard-Vacuum Oil Company did not complain of the hardships resulting from these hindrances upon trade so long as they were considered necessary to the prosecution of the bandit suppression campaign, that company has now expressed its desire for the early removal of all such hindrances, which, if continued in the form indicated by the regulations would appear to result in a virtual monopoly of the sale of kerosene in that Province.
Accordingly, in an instruction of February 19, 1935, a copy of which is enclosed,66 the Legation directed the Counselor at Nanking to call upon an appropriate official of the Ministry of Foreign Affairs and request to be informed of the plans of the Government with regard to the question of the gradual removal of the restrictions upon trade which had been found necessary during the bandit suppression campaign. Mr. Peck was directed to endeavor to impress upon the official with whom the matter was discussed, the desirability, in the interests both of the trade and of the revenue, that all restrictions be removed as soon as conditions permitted. It was also suggested that he might appropriately point out the fact that any permanent restrictions which in practice result in a monopoly of the sale of petroleum products would be contrary to the treaty obligations of the Chinese Government.
In his despatches in reply, No. 635–Diplomatic of March 2, 1935, and No. 650–Diplomatic of March 13, 1935, copies of which are enclosed,67 the Counselor of Legation at Nanking reported having taken this matter up with Dr. Tchou, the Director of the Department of International Affairs of the Ministry of Foreign Affairs, who, in compliance with a suggestion of the Ministry of Finance, had referred it to the headquarters of General Chiang Kai-shek, now located in Wuchang.
In his further despatch to the Legation No. 60 of March 7, 1935, a copy of which is enclosed,66 the Consul General at Hankow reported the continued collection in Kiangsi Province of a so-called “Bandit Suppression and Rehabilitation Tax”, and, as the question of the continued collection of this tax and that of the proposed formation of cooperative societies for the sale of kerosene would both appear to be closely related to the plans of the National Government for rehabilitation in Kiangsi Province, the Legation, in an instruction of March 12, 1935, a copy of which is enclosed,66 directed the Counselor at [Page 777] Nanking again to call upon the Director of the Department of International Affairs and once more endeavor to urge the desirability, in the interests of all concerned, that all such restrictions and hindrances upon trade be removed as soon as conditions permit. Mr. Peck was also directed to point out that the imposition of the taxation in question would appear to be contrary to the announced policy of the National Government to strive towards a unification and simplification of taxation, and again to express the Legation’s sincere hope that now that the bandit suppression campaign has been concluded in Kiangsi Province adequate measures may be taken to ameliorate the situation there by the removal of the various existing restrictions and restraints upon trade.
In his reply of March 22, 1935, a copy of which is enclosed,68 the Counselor of Legation reported a further interview with Dr. Tchou, from which it would appear that no reply had been received to the inquiry which had been addressed to the headquarters of General Chiang Kai-shek, but that Dr. Tchou promised that his Ministry would address another communication to the headquarters in Wuchang, conveying the information regarding the Rehabilitation Tax and setting forth the substance of the Legation’s views upon the subject as well as those of the British Legation which, according to Dr. Tchou, has also made representations in the premises.
For the completion of the Department’s files, there is enclosed a copy of the Hankow Consul General’s despatch to the Legation No. 80 of March 27, 1935,68 reporting the continued requirement of “huchaos” for shipments of kerosene within Kiangsi Province.
As these various hindrances upon trade which are being encountered by the oil companies doing business in Kiangsi Province would appear to be an aftermath of the bandit suppression campaign and to be closely related to possible plans of the National Government for rehabilitation in that Province, the Legation, believing that the best interests of all concerned would thereby be served, has contented itself with inquiries as to the plans of that Government and an expression of its hope that an early means would be found to ameliorate the situation now that the bandit suppression campaign has been concluded.
Should the rehabilitation plans of the National Government when revealed envisage measures which would impinge American treaty rights, then the Legation contemplates giving further consideration to the possible desirability of entering formal protest with the Government.
Respectfully yours,