893.512/889: Telegram
The Minister in China (MacMurray) to the Secretary of State
880. 1. Following from Shanghai:
“December 13, 3 p.m. The Minister of Finance of the Nationalist Government has approached the Standard Oil Company with the proposal that the present tax agreement be redrawn with a view to the incorporation of the dollar consumption tax on kerosene and gasoline in the present tariff. Soong recognizes the fact that the company have certain protective clauses in the agreement of March 2, 1928, and has offered to grant similar protective clauses in any new agreement which might be entered into, providing the equivalent of this consumption tax on kerosene and gasoline [omission?] by the Chinese Maritime Customs. The company is not inclined to consider favorably the proposal. The company would greatly appreciate comments and advices should there be any objection on the part of the American Government to the company entering into an agreement such as proposed by Soong.
[Page 528]Hopkins90 of the Standard Oil Company wishes to recall his conversation of August 5, 1928, with Minister and Davis91 at Peking.”
2. I am replying in part as follows:
“With reference to the attitude of the American Government toward the Standard Oil Company entering into an arrangement such as that proposed by Soong, the company should be informed that the making of private agreements of this character is a matter to be decided solely by the company itself, concerning which the Legation cannot undertake to give advice. I am however repeating your telegram to the Department for any possible comment that it may care to make.”
3. When it was proposed at the time of the Customs Conference92 to increase the duties on kerosene from 5 to 12½ percent, it was contemplated that at least a definite program would be formulated and commenced for the gradual abolition of likin. Instead of following out this course the Chinese have apparently now added to an increased import duty the equivalent of the consumption tax now paid by the oil companies under private agreement in commutation of all other inland charges. This has been done in spite of the fact that the Nationalist Government, except in the provinces of Kiangsi, Che-kiang, Anhui, Kiangsu and Fukien has acknowledged itself unable to give any assurance of immunity from still further transit and other taxes arbitrarily imposed by local authorities.
It should be noted that other commodities concerning which private agreements were not made are apparently entering into the dangers now facing the oil companies.
4. Although the taxes paid by the tobacco companies under private agreement are apparently not being added to the import tariff, it is understood nevertheless that cigars and cigarettes are to be subjected to a 32 percent excise.
- Telegram in three sections.↩
- Paul S. Hopkins.↩
- John K. Davis, first secretary of Legation in China.↩
- Foreign Relations, 1926, vol. i, pp. 743 ff.↩