COMPANIES TO PROMOTE TRADE IN CHINA.
Mr. Julean Arnold, now and for many years our commercial attaché in China, in testimony before the Judiciary Committee of the House made the following statement:
The 8,000 Americans in China are staunch, loyal American citizens and in no sens wish to evade any responsibilities or duties as American citizens. They do not ask that they he exempt from the payment of their personal income taxes, as our Britisher do who derive their incomes from Chius sources, but in order that they may continu their business enterprise in China. in order that they may add to American trade and development enterprise in the market of the world's greatest potentialitics, and in order that they may advance American prestige throughout the Orient. they ask that they be given equality of consideration with their British competitors, in China. under Federal incorporation and exempt from home taxes on such companies. The Japanese meet this situation in order to encourage their nationals in trade and in other onterprise in China by stipulating that in lieu of Government taxes Japanese cor porations in business in China may expend the equivalent in purchases of real estate ** Chinese welcome in that country. There is still another consideration. opportunities to associate their capital and themselves with American enterpris in their country, now at the dawn of modern industrialism and soon to offer to the world the greatest of markets. It is deridedly to the interest of American trade in China that every possible encouragement be given to joint American-Chinese enter- prise. The British and Japanese accord facilities and advantages in connection with joint Chinese enterprise, through the British China companies act and through the withholding of taxes on Japanese corporations, which discourage Chinese from seeking a filiations with those whom they prefer to be associated with, the Americans, because of the difficulties to incorporate under State statutes and because of the heavy tax impositions on American organized corporations.
Some idea of the importance of the China trade to America is given in the following figures of the trade between the two countries taken from the Chinese customs reports:
1904
1909..
1914
1919
Toals.
COMPANIES TO PROMOTE TRADE IN CHINA.
5
the sale of American merchandise. The situation in that country is peculiar, because of its undeveloped industrial system. Every Anier- ican firm engaged in domestic business in China purchases a large quantity of American goods, not only for his own use but also for the people of that country.
Great Britain and other countries are engaged in building up trade with China by this very method. There are a number of Americans in China engaged in this work. Until recently they were able to incorporate and carry on their business under English laws, but lately these laws have been so changed that all corporations created under them must be controlled by citizens of Great Britain; and as such they are operated in the interest of the British foreign trade.
Such foreign corporations are as a rule exempted from corporation taxes on the business they conduct in China; that is particularly true of English corporations, which are our chief competitors. Witli- out such an exemption and without the opportunity to carry on business in a suitable corporate form our trade with China will suffer greatly.
In dealing with the Chinese people it is very important that the corporation should be authorized by the National Government instead of under the laws of some State. The Chinese, as a rule, are friendly to this country, but they know very little of our States and their system of laws.
Within its delegated powers Congress has the undoubted right to pass laws to govern and to aid its citizens while in a foreign country. In the Edge law Congress authorized the creation of corporations 56, 269, 000 with power to aid foreign commerce by loaning money or credit to 65,054,000
the purchasers of American merchandise in foreign countries. In 80, 643,000
making such a loan, these corporations are not engaged directly in the act or import trade, but they are aiding such commerce and serve as an instrumentality for that purpose. No one, it is believed, seri- have repeatedly held that the power to regulate commerce includes the power to aid.
211, 000, 000
This means that the trade between the United States and China has nearly quadrupled in 15 years and gives some idea of future possly disputes the power of the Government to do that. Our courts sibilities if we can be placed on even footing with our competitors American trade with China largely centers in Shanghai. The trade standing of the four principal nations in the Shanghai trade for 1919 also speaks eloquently for American enterprise in that part of the world. The figures are as follows:
United States..
Japan.
Great Britain.
France.
$194, 908,000 158, 892,000 129, 147, 000 45, 607,000
Give American merchants in China an equal chance and the resulting benefits to American manufacturers, business men, farmers. and labor will outweigh a hundred times the small loss in taxes which we forego.
The question of whether Congress has power to pass this bill has been given much consideration. It is apparent on examining the proposed legislation that the corporations sought to be created are not designed to engage as a business in exporting or importing mer chandise from or into China, but are expected to conduct business in China of a character domestic to that country, such as erecting and operating factories, electric light plants, telegraph, telephone, and railway lines.
While these corporations are designed to serve domestic trade in China, their real purpose is to aid in building up a market there for
The word "commerce "in the clause of the Constitution granting congress the power to regulate it has received the broadest possible struction. It means not only commerce in its more limited sense, intercourse. Corporations formed under this bill will be engaged American citizens in dealing with the people of Chips, and the chatters that are authorized will serve as instrumentalities for inter- rse with the Chinese people. The framers of the Constitution no doubt intended that all power of intercourse with foreign nations and their citizens should rest with the Federal Government. The power aid our citizens under circumstances such as this would seem to be an attribute of sovereignty possessed by every independent nation. power clearly does not belong to the States. Under treaty with China we have a right to trade with that country and we have our w courts to administer American law there. Charters granted under legislation such as this does not only grant a privilege but its effect, we have a right to believe, will be to govern our people in con- ducting business in China so as to protect them and to protect the Chinese people from being exploited by irresponsible persons. The adoption of this legislation, with its many salutary restrictions upon business methods, should tend to safeguard our own people and pre-
This
635
No comments yet.
Private notes are available after approval.