Papers Relating to the Foreign Relations of the United States, Transmitted to Congress with the Annual Message of the President, December 5, 1870
No. 210.
Mr. Thomas H. Nelson to Mr. Fish.
Sir: I have the honor to transmit herewith a copy of the very interesting and valuable response of our acting consul at Aguas Calientes to the circular of the Department of State of the 18th of August, in regard to the commercial relations between the United States and Mexico.
Mr. Martin R. Pilon to Mr. Thomas H. Nelson.
Sir: In obedience to the request contained in the circular of the State Department of the 19th of August last, I have the honor to make some remarks upon the commercial relations of the United States and the Spanish-American countries.
I can say that in Mexico the importing and exporting trade, and also the dealings in bills of exchange, are in the hands of foreign houses, principally German, English, and French, and I am told that in the rest of Spanish America it is also the case. It must then be assumed that the Spanish Americans have not the power to control and direct their trade neither here nor there, unless it be by a treaty favoring one or some. As to the above-named foreign commercial houses, they are guided in their operations more by the precepts or laws of trade than by preferences for the productions of their respective nations; because it is seen that the Germans bring for sale more English and French merchandise than goods produced by German countries; the French do the same, mixing English goods with their French stocks; the English also take some goods from the continent, and all, merchant-like, strive to bring what may give quick and good results.
By tradition I know that in times past nearly all Mexico drew supplies from the ports of the United States and Cuba, and there sent specie, &c., for investments in bills of exchange or purchases of cotton, &c., for remittances to Europe. It appears that then we had a larger trade than now, but in reality it was, perhaps, not so. Foreign goods, bought purposely for the trade by New Orleans or New York houses, or foreign bonded goods, were brought here in larger quantities than those of our production.
My assertion that European houses in Spanish America deal in goods that are in demand, whether produced by their own country or not, can be verified by inquiries made of our various consulates. English manufacturers first, French next, and the commercial houses of Hamburg, Bremen, &c., derive the greatest benefit from the trade with Spanish America.
A solid support possessed by the European houses in Spanish America is the low [Page 291] rate of interest they pay to their home constituents, being only from 4 to 6 per cent.; goods not quickly realized can bear this burden: but an American merchant, to his home constituents must pay from 6 to 9 per cent., and this is an obstacle to ordering home goods, because all sales run the risk of some demurrage. Another advantage to Europeans is that wool, gum, dyes, drugs, &c., shipped to Europe give better returns, on account of the low custom-house duties.
Regarding the shipments of specie directly to the banks of England and of France, at all times, it should not be looked upon as proofs of the proceeds of exclusive European commerce. Americans might find it beneficial to give the same direction to their bullion. In times of broils the chieftains of Spanish America have the reputation of being depredators, so merchants have commonly their specie insured against land and sea risks. Policies of insurance for such risks are emitted in Europe only, up to this time.
When specie is placed in a port for shipment it costs about the same to place it in Europe as in the United States, and for the sake of exchange operations it is disposed of with a higher profit when stored in London or Paris.
The commercial inferiority of our own country in Spanish America may be owing also to our present inaptitude to furnish the goods or wares that are suitable to Spanish America; the preference which is given to European fabrics is because these take their fancy better. Europeans in times past as well as now have made it an object to get up and gather samples of what is desired in silk, linen, cotton, and woolen goods, and other wares. This course insures ready return at paying prices, and a continued increase of trade.
It has been observed frequently that American dry-goods imported into Mexico give bad results; the dull colors and patterns of the goods are not relished by Hispano-American tastes, which call for what is gaudy even if flimsy, Cotton prints are of vast consumption, and ours, as far as class and solidity go, are superior to the European, but are inferior in designs and bright colors.
Our inland or domestic trade is fairly prosperous, so that our manufacturers of dry-goods and other wares have not been compelled as yet to seek buyers abroad like the English, French, and Belgians; but it will be wise perhaps to see how we can enlarge our foreign trade willingly and gradually, before we are absolutely forced to it by not knowing how to dispose of our future over-productions. Mexico is to us differently situated than the rest of Spanish America, especially if some day the ship canal to the Pacific be cut through it, or even through Central America. If with Mexico we could have a treaty for mutual free trade, it would benefit her and ourselves. At present her wool, for instance, cannot go to our country on account of the heavy customs dues, and many other articles are in the same predicament. Our cotton fabrics of the present could compete with the European ones only if they were admitted with a differential duty in their favor.
With the many waterfalls and steam-power of the United States, joined to the home production of raw cotton, we have the elements for becoming sooner or later like England, another workshop of the world: we could be particularly prominent and excel in cotton fabrics. Europeans have to go far to obtain the raw material, carry it to their spindles and looms, and go out with it afterward to seek a market, making carrying operations that are unnecessary for us.
It seems that it would be money well spent if Congress could make a steady yearly appropriation to employ competent agents to collate information and samples for the benefit of the manufacturers of our country.