Even 700 KBps seems very low - unless it's only a 10 Mbps ethernet link. What is the topology? Any routers etc in the path? What I'd do is get a packet trace (use Wireshark on the Linux box, or a SYSTCPDA CTRACE on z/OS) and check for packet retransmissions or other anomalies. Wireshark is very good at pointing out anomalies, so it's not hard. For example, if you have a full/half duplex mismatch somewhere along the path it'll slow FTP transfers down a lot (usually in one direction more than the other). Does z/OS FTP to/from other servers at a decent rate? If so, it's probably not a z/OS problem.
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