File No. 611.9331/40
Minister Reinsch to
the Secretary of State
No. 1348
American Legation,
Peking,
January 16, 1917.
Sir: Referring to previous correspondence
concerning the export of flour by certain Chinese dealers in exception
to the treaty stipulation forbidding such exports, I have the honor to
enclose for the information of the Department the following copies of
correspondence on the subject:
From |
Foreign |
Office, |
No. |
428, |
of |
January |
14, 1916. |
To |
“ |
“ |
“ |
411, |
“ |
“ |
24, 1916. |
“ |
“ |
“ |
“ |
491, |
“ |
Sept. |
4, 1916. |
From |
“ |
“ |
“ |
508, |
“ |
“ |
14, 1916. |
To |
Shanghai |
|
“ |
1919, |
“ |
October |
21, 1916. |
From |
“ |
|
“ |
1058, |
“ |
Nov. |
11, 1916. |
To |
Foreign |
Office, |
“ |
536, |
“ |
“ |
22, 1916. |
From |
“ |
“ |
“ |
544, |
“ |
Dec. |
6, 1916. |
To |
“ |
“ |
“ |
543, |
“ |
“ |
16, 1916. |
From |
Foreign |
Office, |
“ |
555, |
“ |
January |
10, 1917. |
From this correspondence the Department will perceive that the attitude
of the Chinese Government in this matter has been unsatisfactory—that it
has throughout acted evasively and even disingenuously, and that it now
stands obstinately on the fantastic contention that its exception to its
own construction of the treaties—an exception made in discrimination
against foreign interests, for the profit of a particular group of
Chinese merchants—is justified by the
[Page 277]
facts that that discrimination has a definite
though very large quantitative limit, and that it is made in favor of
“reliable Chinese merchants.”
I cannot escape the conclusion that this attitude of the Chinese
Government is dictated by subservience to the powerful Shanghai milling
interests concerned: and although I am taking occasion to lay the case
in person before the members of the Revenue Council, which has authority
in this matter, and insist that the discrimination be discontinued as
from the Chinese New Year (the 23d instant), I am not hopeful that the
desired object can be attained without bringing to bear some such actual
or threatened coercion as indicated in my telegram of today’s date.
I have [etc.]
[Inclosure I—Translation]
The Vice Minister for Foreign
Affairs to Minister Reinsch
No. 428
January 14, 1916.
Sir: I have the honor to acknowledge the
receipt of your note (No. 399 of December 11, 1915), relating to the
application of American merchants to export flour, in which you
state that should the exceptional permission to export be continued
American merchants should enjoy the same privilege.
This Ministry communicated with the Revenue Council and has since
received a reply, as follows:
“The export of grain is prohibited by the treaties. Because
the Chinese residing at Hongkong, Singapore and other places
were in urgent need of purchasing food the Chinese
Government gave special permission to Chinese merchants to
ship flour to these localities as a measure of assistance.
The reason for this action being to relieve the Chinese
residing abroad it should not on this account be suspected
that the stipulations of the treaty are being defeated.
Moreover, in shipping grain the Chinese merchants are
restricted to a certain amount and they must furnish
guaranties stating that the shipment is solely for the
relief of Chinese residing abroad. It would be impossible
for merchants of low character to export grain for sale in
quantity and at their own pleasure.”
The temporary permission to Chinese merchants to export grain was
given for the sincere purpose of relieving the Chinese residing
abroad and is not different from the relieving of distress inside
the country. The restrictions as to the amount and as to the
furnishing of guaranties are very strict. The relief of Chinese
residing abroad thus includes the idea of carefully respecting the
law regarding the prohibition to export. The merchants of other
nations cannot therefore rely on this as a precedent.
With compliments,
[Inclosure 2]
Minister Reinsch
to the Minister for Foreign Affairs
No. 411
American Legation,
Peking,
January 24, 1916.
Excellency: I have the honor to
acknowledge the receipt of your note (No 428) of January 14, dealing
with the matter of the export of flour and grain from Shanghai. I
regret to state that the Revenue Council has entirely ignored the
fact that the flour exported from China under special permit was
freely sold to any purchaser in Hongkong and other southern ports.
It cannot therefore be distinguished from general commercial export;
nor does the treaty provide for exceptional export for the
assistance of Chinese residing abroad, under any circumstances.
I have recently been informed that the flour export business from
Shanghai * * * has been under the sole control of the chairman of
the Chinese Chamber of Commerce in the native city at Shanghai who
controls the output of the
[Page 278]
Lee Dah and the Sun Dah mills at Shanghai, that most of the flour
exported comes from these mills, and that the whole arrangement is a
result of political influence.
It is therefore necessary for me to insist either that this
concession be immediately canceled, or that a similar permission to
export grains and flour be given to foreign merchants. In default of
such action, I should be compelled to lay the matter before the
Diplomatic Corps in order that joint action might be taken for the
enforcement of the treaties.
I avail [etc.]
[Inclosure 3]
Minister Reinsch
to the Acting Minister for Foreign
Affairs
No. 491
American Legation,
Peking,
September 4, 1916.
Excellency: I have the honor to inform
your excellency that it has been reported to me that your Government
has issued a permit for the export of one hundred thousand bags of
flour from China during the current season. Your excellency would
greatly oblige me by informing me as to the correctness of this
report. I assume, of course, that foreign merchants would be
included within the scope of this permit so that they could export
flour from China.
I avail [etc.]
[Inclosure 4]
The Acting Vice Minister for
Foreign Affairs to Minister Reinsch
No. 508
September 14,
1916.
Sir: We have the honor to acknowledge the
receipt of your note of the 4th instant (No. 491), in which you
state that it has been reported that the Chinese Government has
issued a permit for the export of one hundred thousand bags of flour
during this year, and you ask if the report is correct.
This Ministry has made inquiry of the Revenue Council, which now
replies that there is no truth in the report, and asks that you may
be so informed. We now ask you to take note of the denial.
[Inclosure 5]
Minister Reinsch
to Consul General Sammons
No. 1919
American Legation,
Peking,
October 21, 1916.
Sir: Referring to your Consulate General’s
despatches of November 13 and 17, 1915,4 in regard to the exportation of native
milled flour from Shanghai in competition with the American product,
I have to advise you that the Legation has now received the
following information in regard to this matter:
The treaty prohibition against the exportation of grain and other
cereals, which has in general been interpreted by the Chinese
Government as including flour as well, was last year relaxed by the
granting of a special permission to export a large but limited
quantity of native-milled flour from Shanghai: the Maritime Customs
at Shanghai were accordingly authorized last year to pass one
million bags of such flour for export to Hongkong, Dairen,
Singapore, Java and Vladivostok: this authority lapses on November
30 next. It is not known what proportion of the amount so authorized
still remains unexported, but on or about the end of last June there
was such a balance of two hundred and sixty-eight thousand (268,000)
bags.
The Legation is furthermore informed that the flour whose exportation
is thus authorized, while paying no export duty, nevertheless pays,
for the exceptional privilege so granted, fees to the amount of
thirty (30) Shanghai candareens per fifty-pound bag, twenty-five
(25) candareens of which go to the Central Government and five (5)
candareens to the chamber of commerce at Shanghai, through whose
intermediation the matter was arranged.
[Page 279]
From the letter addressed to you by the Shanghai Superintendent of
Customs on November 16 last (a copy of which was enclosed with your
No. 649), and from certain references in the correspondence between
the Foreign Office and the Legation on this subject, it would appear
that special permission to export flour from Shanghai was granted by
the Government to be availed of only by certain Chinese mills: the
Legation has, however, understood from Mr. A. S. Fobes (Manager of
Fobes Company, Limited) that this permission may be availed of by
anyone upon payment of the fees specified.
The Legation desires you to make such inquiries of the Chinese
chamber of commerce, of the office of the Shanghai commissioner of
customs, of Mr. Fobes, and elsewhere, as will enable you to make a
full report in regard to this relaxation of treaty stipulations in
favor of native-milled flour, with a particular view to verifying or
correcting the statements above quoted, and more especially
establishing whether or not the special previlege of exportation has
been reserved for the benefit of a Chinese monopoly, and its
benefits denied to foreigners. It is desired that this report be
submitted in triplicate.
I am [etc.]
[Inclosure 6]
Consul General Sammons to Minister Reinsch
[Extract]
No. 1058
American Consulate General,
Shanghai,
November 11, 1916.
Sir: I have the honor to acknowledge the
receipt of the Legation’s despatch (No. C. 1919), dated October 21,
1916, in regard to the exportation of native-milled flour from
Shanghai in competition with the American product, and to report as
follows:
I have learned from reliable sources that native flour, by special
permission granted last year, is allowed to be exported through the
Chinese customs to the extent of 1,000,000 bags, by anyone
presenting a huchao issued by the local
superintendent of customs. Originally a time limit of till November
30 of this year was fixed for the exportation of the above amount,
but owing to the fact that in the latter part of October last, the
unexported number of bags amounted to between 300,000 and 400,000,
the time limit was ultimately indefinitely extended to suit the
convenience of the exporter, although it is understood that the
first proposal was to simply extend the limit till the end of the
year. * * *
This special relaxation of treaty stipulations prohibiting the
exportation of cereals, was brought about with the purpose of
rendering assistance to the Chinese emigrants (Chiao hsiang) residing abroad, on account of the scarcity
and high price of foreign flour, and at first applied only to
shipments made to Hongkong and Singapore, but later was extended to
apply to Java, Vladivostok and Dairen as well. However, it is known
that some of the flour thus exported has simply been sent to
Hongkong and Singapore, and from thence exported to other countries,
some even reaching France.
Although flour thus exported is exempt from the payment of export
duties, it pays fees of Mexican 50 cents per fifty-pound bag, or say
Taels .30, and in addition a yun tan or
transportation tax which varies in accordance with the size of the
shipment, but works out at an approximate average of Mexican 50
cents per 500 bags.
I am informed that the customs is not aware of any discrimination
against foreign firms, but that their concern is simply with the
honoring of huchaos as presented.
Mr. Koo Shung-ih, Chairman of the Nantao chamber of commerce,
Shanghai, from whom Mr. F. S. Fobes obtained the information which
he later gave to the Legation, was interviewed and largely
corroborated the statements made by Mr. Fobes. He stated that to his
knowledge some ten or more native mills in Shanghai had availed
themselves of the privilege, but that on account of the fact that
each fifty-pound bag is taxed the sum of Mexican 50 cents, together
with the additional consideration of the high valuation of silver,
there has been no special “scramble” on the part of native millers
to export under the special regulations. To the above charges should
be added the cost of freight to Hongkong or other destination and
the yun tan tax. According to Mr. Koo, there
have been exported
[Page 280]
to date
some 800,000 bags. This it will be noted is a greater amount than
that stated by my informant * * *. He adds that he knows of no
arrangement by which the chamber of commerce receives any portion of
the special privilege tax, and that the arrangements were made on
the petition of the Chinese residing abroad; further, that there is,
so far as he knows, no discrimination against foreign exporters,
they being free to avail themselves of the same privilege, by
obtaining the necessary permission from the superintendent of
customs, Shanghai.
The Fisher Flouring Mills Company of Hongkong, within the last few
days made application through this office to the superintendent of
customs to export a quantity of flour, but the latter replied to my
despatch in part, as follows:
* * * “and in all those cases of exportation
of flour by Chinese merchants to Hongkong and Singapore, it
was only by special leave of the Government that limited
quantities of this product were shipped as a food supply to
the Chinese residents at these places. This cannot be
alleged as a precedent by all other merchants applying for
permission to ship such products, as stated in my letter of
November 16, last, in reply to your previous request, made
in behalf of Fisher Flouring Mills Company, for permission
to export flour and wheat. I have reported on the matter to
the Revenue Council (Shui Wu Chu) and
received its official reply to the effect that the
application may be denied in accordance with the treaty
provisions. I have now received further instructions from
the Shui Wu Chu that no more flour
should be allowed to be shipped to the Chinese residents
referred to, when the quantities exported arrive at the
original limit. Under these instructions we shall have to
stop in the immediate future the exportation of flour as a
food supply to Chinese residents abroad, which has been done
with the special authorization of the Government.
Under these circumstances, I am unable to comply with the
request of the American firm—Fisher Flouring Mills
Company—to export flour and wheat to Hongkong.”
The applicant has been informed that the matter is being referred to
the Legation.
This reply is to the same effect as that received by this office
under date of November 16, 1915, in response to a similar
application. A copy of the reply was transmitted in our No. 649,
dated November 17, 1915.
This letter does not bear out the assertions made by the chairman of
the chamber of commerce * * *, that there is no discrimination
affecting foreign firms.
It developed at the interview with Mr. Koo that the tax of Mexican 50
cents is paid to a Mr. Tau Lae-chuen, in the Bank of China Building,
Shanghai, who it appears is a special officer designated by the
Central Government to make these collections. It was stated that
upon application being made to Mr. Tau, and upon the payment of the
special fee, he issues a letter or certificate, which is presented
to the superintendent of customs with the formal application for
permission to export; and further that any firm, foreign as well as
native, can obtain the necessary permission. This office has,
however, been unable as yet to confirm this procedure, as Mr. Tau is
at present absent in Tientsin.
I have [etc.]
[Inclosure 7]
Minister Reinsch
to the Vice Minister in Charge of the Ministry
of Foreign Affairs
No. 536
American Legation,
Peking,
November 22, 1916.
Excellency: I have the honor to recall to
your excellency that during the past year I have had occasion to
address to you several inquiries in regard to the conditions of the
special authorization granted by the Government for the exportation
of flour milled in China. It has been a disappointment to me to find
that the information given in reply to my various inquiries has been
inadequate. In order that I may comply with the instructions of my
Government to furnish it with information as to the essential facts
of what appears to be a departure from treaty stipulations which
discriminates against American trade, I have to request that you
advise me on the following points:
- 1.
- Does the Chinese Government contend that the exportation
of flour or other products of grain is forbidden by the
treaty provisions which forbid the exportation of grains of
all sorts?
- 2.
- If such an embargo on the exportation of flour is actually
maintained by the Chinese Government, has any special
authorization been granted to export flour from Shanghai? If
so, what are the conditions of such special
authorization—particularly as to the quantity which may be
exported and the period during which such authorization is
made available? The Legation is informed that last year
special permission was granted to export, through the
maritime customs, flour to the amount of 1,000,000 bags;
that at least 200,000 bags of the amount so authorized
remains still unexported; and that the time for which
authorization is valid has been extended
indefinitely.
- 3.
- If such exportation is permitted, what duties, taxes, or
fees are required to be paid upon it? The Legation is
informed that no export tax is levied, but that a special
officer, designated by the Central Government, collects in
behalf of the Government a fee of fifty cents per
fifty-pound bag of flour exported, and that there is, in
addition, a transportation tax of approximately fifty cents
per five hundred bags of flour.
- 4.
- To whom, and upon what conditions, are huchaos issued to enable merchants to avail
themselves of the authorization to export flour, and
particularly, may American merchants avail themselves of the
authorization in the same manner as Chinese merchants? I
have to point out that the superintendent of customs at
Shanghai has persistently refused to grant a request of the
American firm—the Fisher Flouring Mills Company—that it be
permitted to export flour from Shanghai in the same manner
as Chinese merchants, and while acknowledging that Chinese
merchants had been allowed to export flour to Hongkong and
Singapore, he has stated that the Revenue Council has
officially informed him that the application of the American
Company “may be denied in accordance with the treaty
provisions.”
I beg to request that your excellency take steps to put me in
possession, without delay, of the replies to these questions, as
desired by my Government.
I avail [etc.]
[Inclosure 8]
The Vice Minister for Foreign
Affairs to Minister Reinsch
No. 544
December 6,
1916.
Sir: I have the honor to acknowledge the
receipt of your note of the 22d ultimo (No. 536), relating to the
application, based on precedent, of an American firm to export
flour. Upon receipt thereof this Ministry wrote to the Revenue
Council to make an investigation, and has now received a reply as
follows:
“Answers to the four queries contained in the American
Minister’s note, setting forth the exact facts, have been
drawn up.
“The first query was as to whether the exportation of flour
or other products of grain is forbidden by the treaties. The
Revenue Council notes that the various grains of the country
cannot, according to the treaties, be transported abroad,
that therefore exportation is forbidden.
“The second query was as to whether any special authorization
has been granted to export flour from Shanghai. The Revenue
Council would state that owing to the difficulty experienced
by the Chinese residents of Hongkong and Singapore in
purchasing food supplies, as a result of the sudden outbreak
of the European War, special permission was granted to
Chinese merchants to ship flour from Shanghai to afford
relief. The amount to be exported was fixed and permission
to ship was granted for a fixed period, at the expiration of
which it was to cease. This case is one of the Chinese
themselves shipping grain to relieve Chinese residing abroad
and does not differ from the relief of our own countrymen in
our own country. It has never been forbidden by the treaties
and no violation of the treaties can be pointed to.
“The third query was as to whether fees or transportation
taxes were collected. The Revenue Council would state that
as this exportation of flour is for the special purpose of
affording relief no taxes are collected. How could a special
fee and transportation tax be collected?
“The fourth query related to the issuance of huchaos and also as to whether
American merchants might avail themselves of the
authorization in the same manner as Chinese merchants. The
Revenue Council would state that in this special case,
whereby authorization is granted to relieve with grain the
Chinese residing abroad, huchaos are
issued only to the most reliable Chinese merchants.
[Page 282]
Other Chinese
merchants cannot by making false representations receive
them. Nor can foreign merchants rely on this as a precedent
to make application to ship. There is no discrimination
against American trade involved.
“It is requested that the contents of this communication be
transmitted.”
I have accordingly the honor to send you this note.
[Inclosure 9]
Minister Reinsch
to the Minister for Foreign Affairs
No. 543
American Legation,
Peking,
December 16, 1916.
Excellency: I have the honor to
acknowledge the receipt of your excellency’s note of December 6,
relating to the export of flour and grain from China.
In its communication to your Ministry the Revenue Council states that
the purpose of the flour shipments from Shanghai is to relieve
Chinese residing abroad. We are, however, not concerned with the
avowed purpose, but with the actual effect of the measure. The
effect has been to place on the markets of Hongkong, Singapore, and
other far eastern ports, huge quantities of Chinese flour as
ordinary merchandise. This special measure is therefore in no way
distinguished in its actual results from a general permission to
export certain large quantities of flour.
The Revenue Council asks, “How could a special fee and tax be
collected?” I would reply that it was collected by the chamber of
commerce of shanghai or by a special agent of the Government at
Shanghai, to whom the administration of this measure was entrusted,
and that it amounted to fifty cents per fifty-pound bag of flour
exported and, in addition, a transportation tax of approximately
fifty cents per five hundred bags of flour was collected.
As the Revenue Council states that American merchants will not be
permitted to avail themselves of the authorization to export grain
in the same manner as Chinese merchants, I am forced to protest in
the most emphatic manner, and I have to state that my Government
will hold the Government of China responsible for any damages to
American merchants through refusal to allow them to participate in
such export of grain as may be permitted to others.
In order to avoid grave difficulties, there are only three
alternatives to be considered: (a) either all export of grain and
flour must remain forbidden; or (b) Americans must be allowed to
share in any permission to export which may be granted; or (c) the
export of grain and flour must be freely allowed to all. To permit
Chinese merchants under the guise of a special arrangement to
export, while prohibiting Americans, is a discrimination to which
the American Government cannot submit. I therefore am forced to make
a request that orders be immediately issued permitting Americans to
share in the permission which is enjoyed by others to export flour
or grain.
I avail [etc.]
[Inclosure 10]
The Minister for Foreign
Affairs to Minister Reinsch
No. 555
January 10,
1917.
Sir: I have the honor to acknowledge the
receipt of your note of December 16, 1916 (No. 543), in reference to
the application, based on precedent, of American merchants for
permission to export flour and wheat. Upon receipt thereof this
Ministry communicated with the Revenue Council, and has now received
a reply as follows:
“The export of flour is regarded by the council as being
under a special, not a general, authorization. The four
special reasons are here restated:
- “1. This country formerly did not allow flour to
be exported. Because of the outbreak of the European
war the Chinese residing abroad were in want of food
and special authorization was given for flour to go
forward as a relief measure.
- “2. The flour permitted to be exported is limited
to a fixed amount, After it has all been shipped no
exportation will be allowed.
- “3. Special authorization is given for reliable
Chinese merchants to export flour. Other Chinese
merchants not being able to do so, foreign merchants
naturally cannot.
- “4. Last year the neighboring countries had a
shortage of grain and China, actuated by a spirit of
friendship, gave special authorization for grain to
be exported as a measure of relief, no objections
being raised by foreign countries. Now that our own
people are short of food the Government has
naturally specially authorized the export of grain
as a measure of relief, and this does not constitute
the least violation of the treaties. Foreign
countries cannot rely on the rule regarding ordinary
merchandise to demand similar treatment.
“Of the three proposals now made by the American Minister,
the first is that the export of grain and flour must remain
forbidden. This is the regular procedure and the Government
recognizes it as the natural course to take. But it is
necessary to wait until the full amount of the flour, for
which authorization to export has previously been granted,
has all been shipped, after which the Government will then
issue a strict prohibition.
“It is requested that the contents of this communication be
transmitted.”
I have the honor to request you to take note.