Foreigners in Japan Hold Out Against Tax, Demand Arbitration

Today’s detective work was prompted by this tiny article from the Brooklyn, New York, Daily Eagle:

Foreigners to Resist Tax.

 — The foreign residents of Kobe, Japan, at a mass meeting recently held, decided to refuse payment of the new taxation on property, as a violation of treaties, until the question is definitely settled between the powers and Japan.

That meeting was held on . (It followed a similar movement with a similar grievance among British residents of Yokohama, and something similar seems to have spread to parts elsewhere.) T.W. Hellyer wrote a letter to the editor of the Japan Mail to explain the grounds for tax refusal more thoroughly. He stated (excerpts):

[T]he resolutions which I proposed at the meeting were the outcome of many consultations with leading business men, and contain briefly the conclusions that Foreigners have arrived at regarding the levy of the House Tax and the threat to distrain in event of non-payment.

As to the attitude taken up of refusing to pay under protest, I may say Foreigners here feel that it is very desirable that the question of their liability to pay or not to pay should be settled as quickly as possible, which certainly would not be case if they followed the advice given in your leading article of : “That the wisest course, &c., would be to pay the tax under protest, trusting their Representatives and the Japanese Government to thrash out the rights and wrongs of the matter eventually.”

I venture to say that if the Japanese Government and the Foreign Representatives arranged to submit the matter to arbitration, then Foreigners would pay the tax under protest, knowing that whatever was decided by the Arbitrators would be accepted as a final settlement of the case.

Hellyer then quotes from another Mail editorial:

“…In the case of the House Tax there is no possibility of going to law. It must be either recourse to arbitration or an appeal to force. The Japanese Government can appeal to force if it be so minded. It can levy this tax. It has the power to do so by employing the machinery of distraint and public sale, and it may be assured that, even in that event, no Western State will carry opposition beyond the limit of remonstrance. But what will then be gained? Japan will have asserted her power, a power of which all know that she is possessed, and she will have collected a small sum of money at the expense of permanently alienating the good will of the foreign communities and creating a lasting sense of unjust treatment. Do the advantages outweigh the advantages?…”

But the Mail did not approve of using civil disobedience to pressure the government into submitting the matter to arbitration. Hellyer continues:

Apparently the only point upon which we differ from you is as to the expediency of paying the tax under protest. I may say that when drawing up the resolution B: “That in the opinion of this meeting land-renters should not pay the House Tax until the question has been finally settled between the Foreign Representatives and the Japanese Government,” my colleagues and I carefully weighed the step we were taking, in publicly announcing that we refuse to pay the tax until the question has been finally settled between the Foreign Representatives and the Japanese Government. And our reason for taking this firm stand is that it will force an early settlement of the question. It is most important that this dispute should be arranged speedily: for so long as it is undecided there will be friction between the diplomatic relations of Japan and the Foreign Powers; there will be acrimonious writings in the Press; and the friendly relations between official and commercial Japanese and foreigners generally will be seriously affected, especially as most Japanese will naturally think (as has already been stated in the Japanese Press) that Foreigners are trying to evade payment of a just tax.

The news as of was that the Japanese government had agreed to submit the legality of the taxation to arbitration, but that in the meanwhile the tax would be enforced, by distraint if necessary, with the money collected to be returned if the arbitration decision went against Japan. By this time, about 250 foreigners were tax delinquents in Yokohama, to the tune of ¥70,000. About fifty of these paid their bills as the distraint deadline approached. Distraints began in Yokohama and Kobe around . Some of these distraints seem to have been mostly theater:

Having shown their warrant the official requested payment of the amount of House Tax owing by the firm. Mr. Keswick declined to make any such payment. He was then informed that in that case they must proceed to distrain upon the firm’s property. First they asked whether any monies or securities were available. At their request the safes were opened, and by a remarkable coincidence, were found to be quite empty of either cash or negotiable documents. In this emergency the officials intimated, with every indication of acute regret, that they must distrain other property, such for instance as stock which might be on the premises. Fortunately there was some silk in the building and to the go-down accordingly Mr. Keswick conducted his visitors, who at once proceeded to indicate what they wished to attach. This quantity of silk was accordingly packed, six boxes, and they put the necessary seals upon it. They now smilingly suggested to Mr. Keswick the difficulty, not to say, impracticability of transporting and storing the seized goods, and asked whether he would do them the favour of storing them for the present. Mr. Keswick readily consented and signed a storage receipt drawn up by the officials themselves, acquiring at the same time a document certifying the seizure of the silk. The amount of the House Tax owing by the firm was some 1,882 yen, and it is to be observed that the officials took care to be considerably on the safe side, the silk attached being about 3,000 yen in value.

More typical seem to have been the cases where resisters left convenient amounts of cash where the collectors could find and distrain it. Some resisters submitted letters of protest on the occasion of the distraint, laying out their legal argument in brief.

The British government advised its citizens to pay the tax while arbitration was pending, and the U.S. government was even more conciliatory to Japan. It recommended that its citizens pay the tax and didn’t intend to defend any tax exemption in arbitration hearings. Russia, Austria, Belgium, Italy, Spain, and Portugal also bowed out. France, Britain, and Germany were participating in the arbitration.

The Mail was disdainful of the ongiong protests, wondering what the point of the pantomime was if Japan had already agreed to arbitration.

The Value of the Distraint Protests.

It would now seem that the purpose of the foreign residents who have submitted to distraint rather than pay the house tax is to make an accumulation of “affidavits which will constitute a very strong point in the eyes of the Arbitration Court.” If the folks who are suffering distraint really think that by refusing to pay the tax they are piling up evidence which will strongly influence the arbitrator, let them proceed with the process by all means. In that case, however, they will admit that the Japanese Authorities have equal and similar reason to collect the tax.

It must be the sincere desire of every one interested in the preservation of good relations between foreigners and Japanese to prevent proceedings such as are now going on, for, whatever may be said, it is intensely disagreeable to have one’s house forcibly entered by tax-collectors and one’s goods distrained. We have therefore argued persistently against carrying matters to that extremity and we have endeavoured to show the futility of individual protests after international action had been agreed to. It is our opinion that every precaution should have been adopted to prevent direct contact between Japanese bailiffs and foreign residents. But if, as is now suggested, the foreign residents consider that their defiant attitude will influence the arbitrator, then we say, continue it by all means. They labour, we think, under an unhappy misconception, but they must be true to the faith that is in them.

[A]fter arbitration, what purpose is this effective protest to serve? Will any of the protesters or their newspaper advocates calmly and seriously answer that question. Will any of them explain what they hope to gain by the effective protest of suffering distraint of what they fear to lose by avoiding distraint?

By another house tax payment had come due, and 235 foreign residents of Yokohama had failed to pay some ¥54,560.

The arbitrators were finally chosen in or thereabouts — a University of Paris professor and the Japanese Minister in Paris, who in turn chose a former State Minister of Norway as their “umpire” (and, as it turned out, tie-breaker).

In , the arbitrators decided against Japan by a 2-1 vote. The Japanese jurist put on record his “entire disagreement with the majority of the Tribunal, both as regards the argument and the conclusion.” This was only the third case to be tried by a new international arbitration court at the Hague.