4. In connection with Kung's apparently strong feeling on this subject I venture the explanation that he believes his reputation is closely involved in the success of the income tax as a measure widely used, the justice of which is almost universally acknowledged. He evidently attaches great importance to the arguments referred to in paragraph 2 of my September 17,7 p. m. He apparently overlooks the fact that rejection of the application of the law to American nationals on grounds of imperfections in the law would hardly have benefited his situation, although he insists he would have had no objection to an acceptance conditioned on actual application to all nationalities. I was appropriate in my comments but the interview ended with Kung apparently feeling much less agreeable than at the beginning. 5. Sent to the Department and Peiping. PECK 893.5123/14: Telegram The Counselor of Embassy in China (Peck) to the Secretary of State NANKING, September 23, 1936-2 p. m. [Received September 23-2 p. m.] 277. My 276, September 23, 9 a. m. 1. So far as this office can learn the only formal replies sent by foreign diplomatic missions to the Foreign Office regarding application of income tax to foreign residents have been from the French and American Embassies (see Peiping's September 3, 2 p. m., paragraph 3). 2. Chargé d'Affaires of Belgium expressed to me yesterday the personal view that although the treaty of November 22, 1928,85 might be interpreted as requiring payment of the tax by his nationals, nevertheless he felt that the treaty would warrant their claim to mostfavored-nation treatment. He had received no instructions. 3. The German Chargé d'Affaires yesterday told me he had sent in no reply but that although without extra territorial jurisdiction Germany would claim exemption on the ground of an oral assurance given by Foreign Minister C. T. Wang 8 some years ago that surrender of extraterritorial jurisdiction would not subject German nationals to discriminatory treatment in matters of this sort. 4. Sent to the Department and Peiping. PECK 85 Treaty of Amity and Commerce, signed at Nanking, November 22, 1928, League of Nations Treaty Series, vol. LXXXVII, p. 288. "C. T. Wang, Chinese Minister for Foreign Affairs at Peiping, 1924-25, and at Nanking, 1928-31. RESERVATION OF AMERICAN RIGHTS IN PROPOSED CHANGES FOR 893.825/81 The Ambassador in China (Johnson) to the Secretary of State No. 658 PEIPING, August 19, 1936. [Received September 21.] SIR: I have the honor to refer to the Legation's despatch No. 3655 of July 2, 1935,88 concerning the Shanghai pilotage question, and to enclose for the information and records of the Department copies of the following further correspondence on the matter: [Here follows list of enclosures; none printed.] 89 Consul General Gauss " reported in his despatch No. 165 of May 5, 1936,88 that at a Consular Body meeting held on that day the Senior Consul distributed copies of a confidential memorandum which was being communicated by the Inspector General of Customs, through the Commissioner of Customs at Shanghai, to the Shanghai Licensed Pilots Association. This memorandum proposed a settlement of the impasse in the pilotage question on the following basis: 1. That consent will be given to filling the existing vacancies by the appointment of two British and one German candidates, in accordance with the pilotage fee percentage arrangement, provided: 2. That in yielding to the Association in this instance China does not prejudice her position in the final settlement of the pilotage question and is not to be construed as relinquishing the Government's title to fill vacancies in the ranks of Government licensed pilots with properly qualified Chinese candidates, irrespective of the amount of pilotage fees paid by Chinese shipping; and 3. That in view of the fact there are at present certain countries whose quota of pilots is in excess of the number allowable according to the percentage of pilotage fees paid by these countries, it is to be understood that, as a temporary expedient pending the final settlement of the pilotage question, whenever vacancies occur in the case of a country the number of whose pilots happens to be in excess of the quota allowable according to the percentage of pilotage fees paid, such vacancies shall be filled by qualified Chinese pilots so as to bring China's quota of pilots temporarily to a total of six. Mr. Gauss stated that it was explained that acceptance of this arrangement would cause no disturbance of the quotas then in operation, except when a vacancy occurred in the case of a country whose quota was in excess of that to which it was entitled by the percentage of pilotage fees paid. 87 Continued from Foreign Relations, 1935, vol. 1, pp. 797-800. 88 Not printed. 89 Clarence E. Gauss, Consul General at Shanghai. The Japanese Consul General took exception to the proposed arrangement and the French Consul General made a reservation of decision in the matter. The British Consul General was disposed to accept the arrangement, pointing out that it represented a practical solution of the matter for the present and that it would take some few years before the total of six Chinese pilots would be reached. Mr. Gauss doubted whether the pilots were entitled to accept such an arrangement without the assent of the interested consular representatives, and stated that he was prepared to submit the matter to his Embassy with the recommendation that the solution be accepted. The British Consul General having questioned whether it would not be better to have the acceptance come from the pilots rather than from the interested powers, Mr. Gauss stated that he had no objection to that procedure but he believed that the pilots should not be expected to accept the proposal without the acquiescence of their interested consular representatives. Mr. Gauss requested in his despatch referred to above that he be instructed whether the Embassy approved acceptance of the solution proposed and also if he should indicate acceptance of the solution so far as American pilots were concerned, whether or not the Japanese and French were prepared to do so with reference to their pilots. He stated that he believed that instructions so to accept should be issued.. to be followed in the event that the British Consul General and the majority of the other interested consular representatives were prepared likewise to accept with reference to their pilots independently of the Japanese and French attitude. Mr. Gauss added that he had been informed that the Inspector General of Customs had encountered great difficulty in persuading the Nanking Government to agree to the solution proposed in his memorandum and that he (the Inspector General) felt that it was the best that could be obtained under the circumstances. The proposal would provide for an eventual increase of Chinese pilots from three to six, out of a total of thirty-six pilots. The Embassy informed Mr. Gauss in its telegraphic instruction of May 11, 3 p. m.91 that it approved the acceptance of the proposed solution along the lines indicated by him. Mr. Gauss reported in his telegram of May 26, 2 p. m.91 that all interested consular representatives favored acceptance of the proposed solution except the Japanese and the French, the latter's attitude being indefinite. Mr. Gauss stated that, confronted with this fact, the Japanese Consul General said that he could of course not prevent his colleagues from accepting the proposal but that at the right time he would negotiate with the Chinese authorities with a view to maintaining and even increasing the present number of Jap 91 Not printed. anese pilots, and that he would proceed without regard to the quota system which now determines the nationality of the foreign pilots. Mr. Gauss discussed this matter in his despatch No. 204 of May 26,2 stating that he felt that the Japanese Consul General had overplayed his hand in the threat he had made to move for more Japanese pilots and to disregard the quota arrangement. He considered that the British pilotage association and pilot company were in a good position to offset any Japanese effort to that end in view of the fact that, while the Japanese might be able to force the Chinese authorities to appoint more Japanese pilots, it did not follow that such Japanese pilots would be entitled to the use of the floating equipment of the pilot boat company or that they would be entitled to membership in the (British) pilots association. Furthermore, it did not follow that, with their appointment as licensed pilots, foreign flag vessels would be required to employ them as pilots for their vessels. So long as the pilots association remains in existence and is recognized, the foreign flag vessels may apply to the association for the assignment of pilots. Mr. Gauss reported in his telegram of June 12, 10 a. m. and his despatch No. 237 of June 12 93 that the British Consul General had on June 11 addressed a letter to the manager of the Shanghai Licensed Pilots Association, requesting him to advise the British members of the association that he had received instructions from the British Foreign Office through the British Embassy to advise acceptance of the arrangement for filling vacancies in the association offered in the memorandum handed to the association by the customs authorities on May 5, 1936, the acceptance to contain the reservation that it was without prejudice to a final settlement of the pilotage question by the national authorities concerned. Mr. Gauss regretted that the British Consul General had not consulted with his colleagues before giving his advice to the British pilots, but stated that the action taken conformed in general to that which he had recommended should be taken by the American authorities. Mr. Gauss requested that he be authorized to give similar advice to the American pilots and, this having been granted in the Embassy's telegraphic instruction of June 13, 10 a. m.,92 he addressed the following letter under date June 13 to the American members of the Pilots Association: "With the approval of the American Embassy, I write to advise acceptance of the arrangement for filling vacancies in the Association offered in the memorandum of the Commissioner of Customs of May 5th last. The acceptance should contain the reservation that it is without prejudice to a final settlement of the pilotage question by the national authorities concerned." Mr. Gauss reported in his despatch No. 237 of June 12 that the Inspector General of Customs had agreed unofficially and informally that the matter would be considered settled if the Pilots Association would address the Commissioner of Customs as follows: "The members of the Shanghai Licensed Pilots Association for their part, accept the arrangement for filling vacancies in the Association embodied in the memorandum received from the Commissioner of Customs on May 5, 1936, without prejudice to a final settlement of the pilotage question by the national authorities concerned." Mr. Gauss enclosed with his despatch No. 259 of June 24 a copy of the Senior Consul's circular of June 22,5 from which it will be noted that the members of the Pilots Association agreed "unanimously" to accept the arrangement for filling vacancies proposed in the memorandum of May 5 from the Commissioner of Customs. Mr. Gauss stated that this meant that the Japanese pilots had joined with their American, British, German and other associates in accepting the proposed solution. He added, however, that it was known that the Japanese Consul General continued to maintain his views in opposition to the settlement.96 Further developments will be reported to the Department. NELSON TRUSLER JOHNSON ASSISTANCE TO PAN AMERICAN AIRWAYS IN SECURING RIGHTS NEEDED TO EXTEND ITS UNITED STATES-PHILIPPINE SERVICE TO CHINA " 811.79690 Pan American Airways/47a: Telegram The Secretary of State to the Ambassador in China (Johnson) WASHINGTON, February 27, 1936-5 p. m. 17. On February 14 an anonymous news item appeared in Washington Post under headline "U. S. Negotiates on Clipper Ship Base in China: Diplomats Seek to Overcome Japan's Objections in Orient," in which, after considerable detail, the writer states "Postoffice and airline officials, however, are confident that Japanese objections to the Manila-China link can be smoothed out 'within a month'. Whatever the outcome of these diplomatic efforts to pour oil on "Neither printed. "The Ambassador in China in his despatch No. 1201, April 22, 1937, reported that "the Japanese have shown no disposition during the past ten months to break away from the present quota system and to press for an increase in the number of Japanese pilots, although it was intimated by Consul General Ishii in May of last year that such a course of action was being considered." (893.825/85) For previous correspondence on the subject of civil aviation in China, see Foreign Relations, 1935, vol. III, pp. 800 ff. |