No. 64.
Mr. Seward
to Mr. Fish.
Peking, January 30, 1877. (Received April 30.)
Sir: By the last courier from Shanghai, I have learned that Messrs. Russell & Co. have agreed, subject to the approval of the shareholders, [Page 89] to sell to the Chinese Merchants’ Company the vessels and other property of the Shanghai Steam Navigation Company. They are to receive two millions of taels, one-half of which sum is to be paid before the 31st of March, and the balance in quarterly installments of fifty thousand taels, with interest at 8 percent.
You are aware that the proprietors of the Shanghai Steam Navigation Company have had occasion, since the initiation of the enterprise in steam navigation of the Chinese company, to fear the result.
So long ago as June, 1875, Mr. Avery reported to you a representation which Messrs. Russell & Co. had made to him in regard to the threatened dangers to their interests. Their statement was, briefly, that the government had agreed to give to the native company certain rice-freights between Shanghai and the Yang-tze ports and Tientsin at rates more than twice as high as those which they would have to pay in the open market, and to grant a rebate of duties on other goods carried by the same vessels to a certain proportion of their whole lading. Mr. Avery, as you will remember, asked the ministers of the foreign office whether this information was correct. They responded promptly that it was. He then asked whether they would be prepared to consider an offer on the part of foreign owners to transport their rice at less than half the rates granted to the Chinese company. They responded with equal promptness, that if their vessels were able to transport the cargo, there would be no occasion for them to seek transportation elsewhere.
Mr. Avery was so kind as to inform me of the result of his interview with the foreign office. I was at once confirmed in my opinion that the government had determined to give support to the native company. This was to be expected, indeed, as it had been formed, as was well known, at the suggestion of the viceroy, Li Hung Chang, in pursuance of his policy to break down foreign interests in China by using foreign means and appliances and with the assurance of abundant support by the government. Messrs. Russell & Co. were, of course, informed of the manner in which Mr. Avery’s representations were met, and were not reassured by it.
In November, 1875, the Chinese company had a nominal capital of one million taels, say one million three-hundred thousand Mexican dollars, of which three-quarters had been paid up. At about this date, at the instance of their patron, Li Hung Chang, they were encouraged by the government to extend their operations. They were intended, in fact, to become a national training-school for masters, officers, and engineers, to be employed in all directions possible by the government, and especially to carry out the policy of breaking down foreign navigation interests in the waters of the empire.
You are aware that when the government were considering last year the opening of more ports, they made fewer difficulties than were expected. It is probable that they expected that their own vessels would reap the chief advantages. At any rate, from the moment when it was decided at Chefoo, in September, to yield the ports to Sir Thomas Wade, in connection with the Yunnan negotiation, greater efforts than ever were put forward on behalf of the company by their managers and their patron, the viceroy, to extend their operations. Mr. Long King-Sing, an accomplished Chinese, and the leading spirit in the company, came here armed with letters from the viceroy, and the result was that the government authorized an advance to the company of a sum of one and a [Page 90] third millions of taels, to be pail by the foreign customs of the various open ports, as follows:
| Taels. | |
| Tientsin | 150,000 |
| Chefoo | 100,000 |
| Hankow | 150,000 |
| Newchwang | 100,000 |
| Kiukiang | 100,000 |
| Shanghai | 200,000 |
| Canton | 200,000 |
| Foochow | 150,000 |
| Amoy | 50,000 |
| Swatow | 50,000 |
| Ningpo | 50,000 |
| Say | 1,300,000 |
Mr. Long King-Sing left here in the latter part of November, and about the 1st of January the purchase of the American company had been completed, and a portion of the money received from the government paid into the hands of the agents for the shareholders.
That the shareholders of our company are to be congratulated on their escape from a dangerous situation, and on the manner of their escape, is not to be doubted. The stock consists of 22,500 shares, of 100 taels each. It has been selling of late at 60–66. They receive two millions of taels and retain their reserve fund and balances, making in all two millions four hundred thousand taels, an outturn of 103 taels to the share, or nearly 56 per cent, over their market-value.
The American company disappears, then, from the waters of China, where it has had a long, successful, and honorable career, which has reflected credit on its management, brought large dividends to shareholders, and given to our flag a prominence which it will never regain perhaps in this part of the world.
The operations of the Chinese company have been mainly between Shanghai and the north. They have, however, lately added to their Yangtze fleet two powerful side-wheel vessels, built to their order in Scotland after an American model. They have had other ships running to southern ports, and occasionally to Japan. The trade between Shanghai and the south is largely conducted by vessels making voyages between Europe and Shanghai, which fill up with the local freights. Only a limited business is done by locally-employed ships.
On the Yangtze an English company has four fine vessels of the American model. Another English company has four vessels running north. It will be interesting to see what will be the result upon these of the competition of the Chinese company, reenforced as it will now be by the eighteen or twenty ships of the former American line. This will depend entirely upon the disposition of the Chinese company and its further support. If they choose to break down all opposition, and their support is continued and increased, as it may be, they can do so. This will probably be the programme. But they may prefer, having now an assured position, to carry on their enterprise in a liberal spirit, thus ensuring dividends to their shareholders and allowing foreign interests to do the same for theirs.
I think now, as I always have thought, that foreigners can manage great enterprises of any kind far more efficiently and economically than can the Chinese of the present day. Our ability to organize and to carry [Page 91] forward great undertakings is due to certain aptitudes which we exhibit in these directions in a far more marked way than has been done in Asia, to the experience which we have gained, to our legislation, which serves to protect all interests concerned, and to the superior honesty which characterizes all classes in our society.
I feel sure, therefore, that in open competition the Chinese could not have forced us to withdraw from the control of the navigation interests of their coast for a long time to come. But I cannot say that I feel sure that their ability, with government aid, to crush us out indicates perfectly that they will be able to manage their enterprise in a way which will be entirely satisfactory to their shareholders and the public.
If the Chinese enterprise were one of spontaneous development, and owed its success to the mercantile aptitudes of the Chinese people, we might feel more content, having a hope that the reprisal of the spirit of enterprise would bring about soon the normal development of their immense resources, to the great advantage of this people and the world. There is, however, enough in the circumstances to assure us that the forces of a higher civilization are at work here in an effective way. If the Chinese can satisfy the demands which these forces are making upon them, they will be allowed to do so in their own way. But defended, as our intercourse is, by treaty stipulations of an extraordinary sort, the foreigner has opportunities here which he will avail of whenever the Chinese in any way fail to do their part.
It would seem, therefore, that China can take no steps backward.
I have, &c,