The Ambassador in China (Johnson) to the Secretary of State
[Received June 15.]
Sir: I have the honor to refer to the Department’s telegram No. 74 of April 22, 2 p.m. and to despatch No. 1213 of May 6, 1937 from the Embassy at Peiping61 regarding the Conservancy Tax at Canton and [Page 654] to complete that office’s report by the following details concerning the views of other interested Embassies on the subject.
The Counselor of Embassy at Peiping reported to me under date of May 9, 1937 that the British Embassy there informed him that it did not consider that any grounds existed for an official protest in this matter. The British attitude on this general question is that the effect of the tariff autonomy treaties was to restore to China full liberty of action in regard both to taxation to be levied by the Customs for conservancy purposes and the particular schemes to which the proceeds of such taxation are applied.
The French Embassy in Nanking has ascertained from its Consul at Canton that the tax has insufficient bearing on French interests there to justify a protest. However, they state that they are not disposed to yield the right to the Chinese Government to impose such taxes where French interests are involved, as, for example, in the case of the Special Consumption Tax in Yunnan.
In view of the fact that the Japanese are alone in protesting this tax at Canton and also that it has been in effect, apparently, since February 2, 1937, and seems to have no important practical bearing on American interests, I request that I be authorized to instruct the Consul General at Canton to make no protest against it at this time.62