the River Trading Company, Federal Incorporated, both of Shanghai, which companies were owned by the Swedish Match Company, and that American interests owned approximately twenty percent of the last-named company. He referred to the Chinese "Match Sales Union" at Shanghai which he stated was expected to have control of the sale of tax stamps and the issuance of permits for the importation of match materials, and said that although these American companies had had no difficulty in securing permits for the importation of chemicals in the past, it was feared that they might be refused import permits in the future. He stated that he had been given the impression that the American Consulate General at Shanghai or the American Embassy had intimated to these above-mentioned firms in Shanghai that if they joined the union the American Government would not give them assistance. Mr. Mackay and Mr. Myers glanced through the recent files on this case and pointed out that there appeared to be no basis for such a statement. They explained the situation in regard to this matter as it was set forth in the files and referred to this Government's attitude of opposition to monopolies. Mr. Atterberg was informed to the effect that, with regard to the question whether, in the light of all the factors involved, it would be advisable for the aforementioned Federal Incorporated Companies to effect a working arrangement with the "Match Sales Union", it would appear that decision should rest solely with the companies concerned. Mr. Atterberg was also informed to the effect that, in the event the companies under reference should be subjected to discrimination by agencies of the Chinese Government, American authorities in China, bearing in mind, however, the admitted fact that in neither of the companies does there exist a direct American interest, would render such assistance as may be deemed appropriate and practicable. 893.61331/68: Telegram The Ambassador in China (Johnson) to the Secretary of State PEIPING, November 4, 1936-11 a. m. [Received November 4-6:38 a. m.] 529. Embassy's 513, October 24, 2 p. m. The Embassy October 24, 2 p. m., directed Shanghai to ascertain from the Lienhwa Company whether the obstructions at Hsuchang had been removed. Hankow reported October 28, 11 a. m. as follows: "Following is translation of telegram received today from Honan Provincial Government in reply to my telegram of October 20th: 'Your telegram of the 20th has been noted. In connection with the temporary leasing of a warehouse at Hsuchang by the Lienhwa Leaf Tobacco Company, this Government has instructed Administrative Inspector Hsu at Hsuchang to afford protection in accordance with his instructions. A special reply.'" Shanghai reported as follows: "October 28, 1 p. m. My October 26, noon. Lienhwa Company today received telegram from representative that Hsuchang magistrate approved lease of premises but cannot give permission for company to commence operations until Honan Provincial Government at Kaifeng approves company's buying procedure. Lienhwa Company accordingly requests that consular representative be detailed to join company's representative, Macon, at Hsuchang to proceed to Kaifeng in order to expedite matters". The Embassy instructed Hankow as follows: "October 31, 9 a. m. Your October 28, 11 a. m; Shanghai's October 28, 1 p. m. The American authorities in this case are concerned only with obtaining for the Lienhwa Company the right, guaranteed by the Sino-Japanese treaties of 1895 and 1896,6% of purchasing leaf tobacco in Honan and obtaining temporary warehouse facilities for use in that connection; the American authorities would not desire to become concerned with negotiations which the company 69 in regard to its buying procedure except in so far as treaty rights are involved. In the light of these circumstances, and in view of the Hsuchang magistrate's acquiescence, as reported in Shanghai's October 28, 1 p. m., your opinion is requested as to the desirability of sending a consular officer to Hsuchang and Kaifeng. Is there still legitimate assistance to be rendered to the company of such importance as to justify such a detail?" Hankow replied as follows: "November 1, 2 p. m. Peiping's October 31, 9 a. m. From the information that has been furnished to this office it seems clear that there is strong local opposition to the Lienhwa Company buying and shipping leaf tobacco at Hsuchang and that the Honan authorities are not anxious to have the company commence operations there. Although some progress has been made towards removing the obstacles placed in the way of the company there is nothing to show that either the Honan authorities or the local interests opposed to the Lienhwa Company are reconciled to the company doing business at Hsuchang and that the company will not encounter further obstruction and delay. I believe it would be useful to send an officer to Hsuchang to investigate the situation on the ground. If the Embassy approves, I shall send Stevens there on November 4th (he cannot be spared sooner) with instructions to proceed to Kaifeng if as a result of his investigation he finds that direct conversations with the Provincial Government are necessary or desirable in order to obtain for the Lienhwa Company the rights to which they are entitled by treaty. He will, of course, be guided, in his decision to proceed to Kaifeng and in any conversations he may have with the authorities there or elsewhere, by the principles laid down in the Embassy's telegram of October 31, 9 a. m." 60 Treaty of Commerce and Navigation, signed at Peking, July 21, 1896, MacMurray, Treaties, 1894-1919, vol. I, p. 68. 60 Sentence apparently garbled at this point. The Embassy, November 2, 1 p. m., instructed Hankow that the proposed detail of Stevens to Honan was approved under the instructions as outlined. Stevens will arrive at Hsuchang November 5.70 JOHNSON 893.61331/80 The Ambassador in China (Johnson) to the Secretary of State No. 890 PEIPING, November 28, 1936. [Received December 23.] SIR: I have the honor to refer to my despatch No. 729 of September 16, 1936, in regard to the proposed leaf tobacco monopoly, and to enclose for the information of the Department a copy in English translation of a formal note received from the Foreign Office under date November 9, in reply to the Embassy's note of June 1, 1936," denying the validity of the arguments adduced by the Embassy against the establishment of the monopoly organization. The attitude of the British and Japanese Embassies in regard to the matter will be ascertained, and the Consulate General at Shanghai is being instructed to report on recent developments. A copy of that instruction is enclosed.72 A new note will be sent to the Foreign Office if the information obtained makes that line of action appear desirable. Respectfully yours, For the Ambassador: F. P. LOCKHART Counselor of Embassy 893.6583/26 The Ambassador in China (Johnson) to the Secretary of State No. 946 PEIPING, December 30, 1936. [Received February 20, 1937.] SIR: I have the honor to refer to the Embassy's despatch No. 692 of September 4, 1936, on the subject of the formation of a vegetable oil monopoly, with which there was enclosed a copy of the Embassy's note of the same date to the Ministry of Foreign Affairs on this subject. The Department will recall that the Embassy requested assurances that the legitimate trade of American firms engaged in the To The Ambassador in China in his despatch No. 881, November 27, reported that Mr. Stevens' interview with the Hsuchang magistrate bore favorable results, as the Lien Hwa Company could commence buying operations (893.61331/79). "None printed. 72 Not printed. 73 Enclosure not printed. vegetable oil business would not suffer restraints as the result of the formation of the China Vegetable Oil Corporation, the officially sponsored organization. A reply has now been received from the Ministry of Foreign Affairs under date of December 15, 1936, a copy of the translation of which is enclosed.73 The Department will note that the reply merely states that no restrictions have been imposed upon the legitimate trade of American citizens. In view of the representations already made by this Embassy and by the British Embassy, and the nature of the enclosed reply from the Ministry of Foreign Affairs, I feel that nothing further need be done until we have actual evidence of restraints upon American firms engaged in the vegetable oil business. I have accordingly requested the Consulates General at Hankow and Shanghai to follow the situation closely and to notify the Embassy of any evidence that the business of American firms is suffering on account of the monopolistic activities of the China Vegetable Oil Corporation. Respectfully yours, 893.61331/82 For the Ambassador: F. P. LOCKHART Counselor of Embassy The Ambassador in China (Johnson) to the Secretary of State No. 953 PEIPING, January 4, 1937. [Received February 20.] SIR: I have the honor to refer to the Embassy's despatch No. 824 of November 5, 1936, with which there was enclosed a copy of an Aide-Mémoire delivered on October 30, 1936, to the Ministry of Foreign Affairs at Nanking by Counselor Peck on the subject of monopoly rights granted to a Chinese corporation to manufacture mentholated and anisated cigarettes from certain recipes, and to enclose a copy of the translation of the Ministry of Foreign Affairs' undated third person note in reply thereto." The note states that exclusive patent rights to use certain recipes in the manufacture of mentholated and anisated cigarettes have been granted to the Philippine Chinese Tobacco Company for a period of five years, but adds that other mentholated and anisated cigarettes, the recipes for which differ from those used by the Philippine Chinese Tobacco Company, are not affected by the exclusive rights granted to this company. The note goes on to state that "There is no intention to effect monopoly control over the tobacco industry". Since there is a technical question involved concerning which the Embassy is not competent to express an opinion, I am instructing 73a Not printed. 74 None printed. the Consulate General at Shanghai to request the representatives of the American interests concerned in this matter to give the Embassy the benefit of their views as to whether the granting of an exclusive right to use these recipes will adversely affect the interests of the American firms already in the field. It is the Embassy's present opinion that if the recipes referred to in the enclosed note differ from those used by the American firms, then no question of monopoly of the market for mentholated and anisated cigarettes would appear to be involved. This situation would, however, be changed if the Chinese Government should grant to a native manufacturer of cigarettes the exclusive patent rights to use the identical recipes used in American mentholated and anisated cigarettes manufactured in China. Respectfully yours, For the Ambassador: F. P. LOCKHART Counselor of Embassy REJECTION BY THE UNITED STATES OF APPLICATION OF CHINESE INCOME TAX TO AMERICAN CITIZENS 893.5123/6: Telegram The Ambassador in China (Johnson) to the Secretary of State PEIPING, August 11, 1936-4 p. m. [Received 5: 20 p. m.] 401. The Embassy at Nanking has transmitted under cover of a despatch dated July 31 a translation of the Chinese "Provisional Income Tax Regulations." Copies of the despatch were sent directly to the Department and should be received within the next week or 10 days.75 The regulations were promulgated by a National Government mandate dated July 21 of this year. The date of enforcement has not yet been fixed but it is understood that the Chinese authorities plan to enforce the regulations as of September 1. No communication on the subject has yet been received from the Foreign Office by this Embassy or the other diplomatic missions here, but it is understood that the Foreign Office will shortly address the various missions, requesting that the tax be paid by the foreign nationals concerned. The British Embassy by authority states that it is suggesting to the British Chargé d'Affaires, now at Peitaiho, that, if a communication is received from the Foreign Office, he reply that the matter has been referred to the British Foreign Office. The British Embassy here is suggesting to the Chargé d'Affaires that he recommend to the British Foreign Office that the Chinese authorities be informed that the British Government cannot consent to the payment of the tax by British 75 Not printed. |