893.512/468: Telegram
The Secretary of State to the Minister in China (MacMurray)
291. 1. Your number 598 of December 4, 4 p.m. and your 602 of December 7, 4 p.m. The Department’s attitude toward British suggestions to accept the Cantonese imposition of taxes with the provision that their collection may be made by the Customs Administration, is outlined in Department’s telegram 287, of December 4, 6 p.m.
[Page 909]2. You were given authority by Department’s 278, November 23, 6 p.m.,92 to concur in proposal granting Washington surtaxes at once without reservations, on the condition that their collection be made by the Maritime Customs.
3. It is desired by the Department that before the matter is discussed with the Government of Japan you further consider the feasibility of this question. The Department has some doubt of the usefulness of discussing the matter with the Government of Japan in order to persuade that Government to adopt a policy it would not otherwise adopt on this question.
4. The question of authorizing the Washington surtaxes to be collected with no other reservation than that the National Chinese Maritime Customs collect them becomes of more doubtful feasibility, it has seemed to the Department, as time passes and as the possibility increases that the Southern regime may extend its control in China over larger areas. The only remaining feature of a national Chinese government, which now has departed, is the Maritime Customs Service, and to the Department it seems that inevitably the adding of the task of making a collection of these new taxes must involve the Customs Service in the question of how to dispose of the revenues so derived and collected and must, since the different factions will begin struggling to gain possession of those revenues, involve the entire Customs Service therefore in the varying fortunes of the factions.
5. It occurs also to the Department that if consent is given at this time to the collection of the surtaxes provided for by the Washington Treaty, without reservation or accompanying negotiation or understanding with any Chinese authority who is responsible, there is danger that such consent may be so interpreted by the several warring factions in China as to indicate a willingness to concede the right to them to impose on foreign trade other, and even more onerous, taxes, and to use for their collection the machinery of the Maritime Customs.
6. Yet another possibility is suggested in this connection in your 602, December 7, 4 p.m., second paragraph; namely, that no guarantee can be expected by us that at the same time as the surtaxes of Washington Conference are being assessed upon our trade by the Maritime Customs we may not find collections of other and similar taxes being made by other agencies than the Customs, with the result that on our trade in the areas in which the regime at Canton has established its control we shall discover that we have doubled the tax.
[Page 910]7. The Department is inclined by the foregoing considerations to believe that the safest and most dignified way to deal at the present time with the difficult and complicated question of the surtaxes is the policy which was outlined in its 287 of December 4, 6 p.m., for, pursuing this policy, this Government would be left free to deal clearly on the whole matter of the taxes and tariffs of China with any new Chinese government that may arise.
8. To the Department it seems to be inevitable that the taxation situation in China must as time goes on become more complicated and that in view of the lack of any authority at present, with which this Government could deal, the only method to follow is to file the usual protests, based upon existing rights under treaty, and to leave the final settlement of the question to the time when a government will show itself able in an orderly way to deal with the situation throughout a substantial part of the territory of China. The difficulty of the situation facing you is appreciated by the Department and your frank comment is desired on the considerations outlined above.