File No. 788/63.
The whole subject is very important, as involving the settlement of
several vexed questions and as creating a precedent for the case of
cities hereafter to be opened. The department supposes that the
arrangements now arrived at will apply equally to cities opened in
pursuance of treaty stipulations and to cities opened by the independent
action of the Chinese Government.
While the department has been in direct correspondence with the
consulate-general at Mukden in regard to these matters, it is of course
fully understood that for its understanding of this complicated subject
and for material to frame its views thereon it looks to the
legation.
[Inclosure.]
The Third Assistant Secretary
of State to Consul-General Straight.
Department of State,
Washington, June 10,
1907.
No. 26, Consular.]Sir: The department confirms your telegram
of May 20, reading as follows:
[Paraphrase.]
(Mr. Straight informs Mr. Root that the foreign office to-day made an
agreement, pending the settlement of status treaty marts; inland
taxes will not be levied in the open cities on foreign goods which
are covered by exemption certificates. The foreign office also
agreed that they will not levy inland taxes on foreign goods in
these cities, pending the perfection of arrangements for the issue
of exemption certificates by the maritime customs and recognition
thereof in the inland marts.)
The department’s telegram to the legation at Peking, dated May 22,
contained the following reference to the above:
* * * “The arrangement described in the telegram of May 20 from the
consul-general at Mukden seems quite consistent with the proposition
approved by the department’s telegram of March 22, assuming that
‘exemption certificates’ mean practically receipts for import duty,
and it is very satisfactory. It is the department’s impression that
pending further developments we need not take up settlement
delimitation. Is this your view?”
In response to which Mr. Rockhill telegraphed:
* * * “Provisional arrangement described by consul-general at Mukden
is acceptable with slight modification which I have suggested.
Settlement delimitation secondary importance, it can await further
developments.”
The department is gratified that seemingly good progress has been
made in adjusting the vexed question of the status of foreign goods
while in transit to, while within, and while in transit between
newly opened cities, and it awaits with interest a precise
description and analysis of the conditions settled upon.
Referring to your dispatch No. 99, to the legation, a copy of which
accompanied No. 59, of March 28, to the department, the department
does not understand your statement, “the proposal to oblige
foreigners purchasing native products in the interior to secure a
‘sanlientan’ is manifestly a contravention of the treaties.” The
department’s understanding of the nature of the “sanlientan,” as to
which it will be glad to have fuller information, is that it is a
kind of certificate which is issued to foreign merchants desiring to
purchase Chinese goods in the interior; that to receive a
“sanlientan” the foreign merchant must give bond for six times the
amount which would be the export duty, which bond will be canceled
upon the payment of the export duty plus 2½ per cent surtax as
transit dues upon the exportation of the goods within a reasonable
time; and that the “sanlientan” makes the goods covered by it exempt
from further taxes in transit. In short, the “sanlientan” is
understood to be virtually a transit pass to cover foreign-owned
Chinese goods in transit for export and involving a bond one-half of
which, i. e., three times the amount of the export duty, is
forfeited if the goods be not exported. It is understood that this
practice is provided for in the so-called “Chinkiang rules,” as to
which, however, the practice varies in different localities.
The reference to “consumption tax” in a proclamation issued by the
Mukden tax office on March 27 is also not clear.
I have, etc.,
