No. 78.
Mr. Seward to Mr. Evarts.

No. 296.]

Sir: It is undoubtedly true that the ports opened to foreign trade under the Chefoo convention have not, so far, answered to the expectations of the mercantile communities. A recent editorial article in the Daily News of Shanghai comments on this fact, indicates the reasons, and states the direction in which the ports will, after a time, prove of decided advantage to trade. The views expressed entirely accord with my own, and I commend them to your attention.

I have, &c.,

GEORGE F. SEWARD.
[Inclosure.]

[From the North China Daily News.]

It was not be expected that merchants would rush to the new ports, as was done at the opening of Tientsin and Hankow. The places now opened to foreign trade are of less importance, and experience has shown that the value of new out ports is rather as affording fresh points of contact than as affording remunerative business to resident foreign merchants. They enable foreign merchandise to be laid down nearer the door of the consumer, at a cheaper cost, therefore, as regards freight, than if they were subjected to various transshipments, and with a greater certainty of escape from likin taxation in transit than when they are traveling in native bottoms. But instead of buying on the spot from foreign merchants, the native dealers are tending more and more to go to Shanghai to make their purchases, availing themselves only of the machinery [Page 117] of steamer transports to lay down their gods at their own place of trade. Obviously, the resident foreign merchant, then, has little opportunity; except at special seasons at Hankow and Foochow during the tea-season, for instance, there is little occupation except for a few commission houses. The great bulk of the business is done at Shanghai, which tends more and more to become a commercial emporium, whither produce is brought, and whence foreign goods are sent out from and to the whole of the Yangtze and northern ports. But even taking all of these circumstances into consideration, it must be admitted that the opening of the new ports has fallen remarkably flat. It might have been expected that two or three foreign houses would have been at once established at each of these new ports in which Shanghai is interested, but W6n-Chow seems, as yet, to be the only place at which the experiment has been made. Of Ichang we know as yet but very little. Its chief value lies probably in its being the head— so far, at least, as the present class of steamers is concerned—of the navigation of the Yangtze. Sha-si, a little lower down the stream, which is made only a port of call, seems to be the chief place of trade. But we may take it for granted that steamer-agencies will shortly be established at Ichang, and we shall gradually learn more about its capabilities. Wên-Chow and Wuhu, however, seem to be the natural outlets for fertile and well-watered districts, and might become places of considerable trade if foreign energy and capital were brought to bear upon their development. Clearly they are not places where foreigners can expect to go and pick up a business ready made. They are not places where those who have been unfortunate elsewhere can hope to rapidly retrieve their fortunes. They are sites of a considerable native trade; but if this trade is to be developed so as to be of value to foreigners, capital and energy are required to collect produce which used to permeate through other channels. Both are natural outlets for tea-producing districts; but such teas as now find their way to foreign markets do so through other channels—to Foo-Chow, Ningpo, and Chin-Kiang. For the present year these teas have been already contracted for, and will follow their old routes. If foreign capital is employed next year, they can probably be collected at the new emporia, and will presumably be laid down there at a cheaper price in view of the shorter distance to be traveled. It is as advantageous to a merchant to buy produce as near as possible to the place of production, as it is to land his goods as near as possible to the place of sale; and herein is one object of opening new ports, multiplying points of contact. Even if foreign merchants do not attempt to develop a local business, the providing of greater facility of carriage will no doubt lead the native dealer to collect produce at the nearer port instead of sending it overland to the dearer one. Before the Tae-ping rebellion, Wên-Chow seems in fact to have been the emporium of a considerable tea trade, the port where the produce of all the neighboring districts was collected; but this concentration was only an element of temptation to the Tae-pings; so the producers elected to disperse their trade through the neighboring minor ports, and it has since continued in the fresh grooves. The opening of the port to foreign trade will probably have the effect of again attracting business to its old center.