No. 73.
Mr. Young to Mr. Frelinghuysen.

No. 94.]

Sir: In my dispatch No. 69, I called the attention of the Department to the action of the Chinese anthorities at Shanghai, forbidding the manufacture of silk filatures by Russell & Co. Dispatches from Mr. Cheshire, the vice-consul general, show that so far as this special interest is concerned the Chinese have not attempted to enforce their interdict. Mr. Cheshire apprehends that there will be no further opposition to the work, and this opinion is confirmed in a note from Mr. Grosvenor, the head of the British legation, in reference to the silk interest of an English house in Shanghai which had also been menaced.

While this is satisfactory so far as the silk business of Messrs. Russell is concerned, it does not leave the general interests of foreigners, and especially their rights to manufacture at the open ports in as good a position as could be desired. The Chinese have aroused a feeling of insecurity in Shanghai, which will make foreign merchants diffident about investing capital, and render it impossible for Chinese capitalists to take interest in any business under foreign control. As a good part of the Shanghai business depends upon Chinese capital, and as the Chinese, dreading the insecurity of their investments when subject to the exactions of the mandarins, seek for foreign shares with an avidity which often lacks in prudence, the moment it is known that the treaties cannot protect foreigners in their manufacturing rights, the business will cease. No Chinaman, however eager for profit, will take shares in a foreign enterprise at the risk of being carried to prison and subjected to the cruel procedures of Chinese law.

The Chinese authorities having carried this point, having practically paralyzed the spirit of enterprise among foreigners and destroyed the sense of security in foreign houses among their own people, do not care about a minor incident like that of Russell & Co. They have practically abrogated the treaty, and there will be no revival, no extension of manufactures at the foreign ports until all is changed.

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I have now to report the receipt of a dispatch from Mr. Cheshire, informing the legation that the warrant for the compradore has been withdrawn.

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I have, &c.,