No. 206.
Mr. Smith to Mr. Fish.
Sir: In compliance with your request in circular of August 19, 1870, for me to give my opinion why the commercial relations between the United States and the Spanish-American republics are so limited, and how an extension thereof could be obtained, I answer you as follows: In the first place, Europe is so densely populated that she lacks the means to give occupation whereby her subjects can gain even a frugal subsistence, and therefore throws a greater number of adventurers and speculators in these countries, who settle in them, than ours. As they have been reared in the straightest economy, they are content with small profits in commercial pursuits, which our people are not, and therefore cannot compete with them; hence the majority of foreign merchants in these countries are Europeans. In the next place, everything imported to these countries are manufactured articles. And again, the cheapness of labor in Europe enables her to manufacture cheaper than we can; and as the majority of importers are from there they naturally look to the fatherland for it. Further, an English company, some years ago, [Page 283] established a line of steamers on the west coast of South America, to ply between Panama and Valparaiso, where by a liberal subsidy from its government enabled it to get in a short time so thoroughly established that it became so strong that an American company without the same advantages could not compete with it. The business of this line is so profitable that they have from four vessels, with which they commenced. increased their number to about thirty-six, completed and running, and several in state of construction; beside factories, warehouses, hulks, &c., &c., in all of the principal ports on the coast. About six of their steamers form a semi-monthly line through the Magellan Straits direct to Europe, which also is becoming very lucrative. All of these steamers being English, they, of course, make direct connections with the English steamers of the Atlantic that ply between different ports in Europe and the Isthmus of Panama. All of aforesaid advantages tend to direct the principal part of commerce from this coast to Europe. And again, the principal part of the products of these countries are raw material, which consists of the following: Medical barks, roots, herbs, &c., &c., cautcho, or chilla, indigo, cochineal, cotton, wool, ivory nuts, nitrate of soda, and ores, which go to European manufactories on account of so much facility in transportation and close business connections. Sugar, in considerable quantities, finds a market in California, and goat skins go to New York. Guano goes to Europe to manure their worn-out lands, which we do not need yet, as our grounds are new and abundant. I think there are three remedies to change this state of things, viz: 1st, to protect home manufacture; 2d, protect shipbuilding and navigation, (which, I am sorry to say, is daily on the decrease,) so as to enable us to compete with Europe; and, 3d, it practicable, (to bring the trade from the republics of the Pacific coast,) the construction of a ship canal at the Isthmus of Panama to connect the two oceans, which would enable craft of all sizes and classes to trade direct from our shores to ports in the different west-coast republics, and vice versa, where all classed vessels could not cross the Atlantic to Europe.
We have already one decided advantage over Europe in these countries, i. e., being founders and setting the example of independence and governing ourselves by the best precepts the world ever knew, in America; their sympathies are decidedly ours, and they look upon us as the head of the family, and have rather complained that they have, they think, not received that natural protection of late due them, but at the same time are reasonable, and consider the circumstances why it has not been fully tendered them; but they still cling to us and look to us to assist them to future prosperity. I think they have a better feeling in these countries for our people, resident and transient, than they have for foreigners of any other countries.