[This Document is the Property of His Britannic Majesty's Government, and should be returned to the Foreign Office if not required for official use.]
96
Code telegram to Sir M. Lampson, (Peking).
No.
Foreign Office, 10.30 p.m. 29th July 1927.
488.(R).
Shanghai telegram to you No.266 (Shanghai Taxes).
If the Powers adopt the course proposed by the
Consular Body in Shanghai the Nanking government would
probably cancel or substantially reduce the new surtaxes
but it is unlikely that they would abandon their efforts
to levy taxes on foreign goods. This would intensify
the evils of likin and involve abandoning the proposed
abolition of native customs coast trade and coastwise
export duties, a retrograde step which we should greatly
deplore. They might also instruct the Commissioner of
Customs to withdraw extra treaty privilages from ships
and merchants who refuse to pay extra treaty surtaxes
a development which might render trade very difficult.
Even the complete success of the Consular Body's scheme
would therefore involve many undesirable consequences
and we should still have to face the issue of tariff
autonomy perhaps in the near future and possibly even
under worse conditions than at present.
2. The United States government is very unlikely
to agree to use force and Japan's concurrence is also
very doubtful. It is not possible for us alone to use
force. In these circumstances I incline to the view
that it would be better to accept tariff autonomy as inevitable especially as it is accompanied by the main-
tenance of the Customs Administration and the abolition
of