No. 76.
Mr. Young to Mr. Frelinghuysen.

[Extract.]
No. 116]

Sir: In my dispatch No. 69 I had the honor to send you a copy of a joint note addressed by the representatives of the foreign powers resident in Peking on November 17, 1882, to his imperial highness Prince Kung and the ministers of the yamên. This note was a further chapter in the history of the negotiations which for nearly three years have been pending between the Chinese Government and the foreign representatives as to the construction of certain treaty, stipulations, and more especially the covenant under which foreigners claim the right to manufacture at the open ports.

The Department has been made fully acquainted with every incident arising out of the discussions, and it is now my duty to inclose a translation of the reply of Prince Kung to our joint note.

His imperial highness contends that the text of the treaty, giving foreigners the right to manufacture, does not bear the construction the foreign powers place upon it. We have held that under this covenant American citizens can engage in any lawful industry and enjoy the profits of their labor. His imperial highness argues that there was no intention on the part of Ms Government to grant such a privilege. If Americans chose to become mechanics or laborers, or to perform any kind of work, there was no objection on the part of the Government. It was never intended, however, that the results of that work should find a market in China, or even be exported to foreign markets in competition with Chinese manufacturers.

His imperial highness points out that under existing treaties foreign manufactures would not be within the control of the Chinese authorities, but under the provision of exterritoriality would be irresponsible. The inference is that any manufacturing interest taking root in China, competing with ancient and long-established forms of industry, and independent of any authority except that of diplomatic and consular officers, would be a source of danger to China. The Chinese never contemplated such a contingency when the treaties were made, and do not assent to it now.

His imperial highness refers to the efforts of an American firm in Shanghai to establish a cotton yarn manufactory, and explains the reasons why his Government opposed and destroyed that enterprise: First was the general objection to foreigners engaging in any manufacturing business; second, there was a special objection in this, that the proposed American company was in contravention of a patent or monopoly granted by the throne to a Chinese company, giving them the exclusive [Page 188]right to make cotton cloth in Shanghai for a period of ten years. His imperial highness contends that as China wishes to encourage and nourish a new industry by protecting it under the treaties, no foreigner should be allowed to compete and destroy it. He further claims that the granting a patent or a monopoly by the throne was a proper use of the imperial power and as such should be respected by foreign nations.

His imperial highness insists that the imperial Government has been acting in entire harmony with the spirit of the treaties, and that the foreign powers have no right to claim from China more than the contracting parties have nominated in their bond.

The views of the legation upon these subjects have been so fully expressed to the Department that I shall not trouble you by repeating them. I content myself, therefore, with submitting the latest argument of the Chinese Government. From this you will see that we have really made no progress in coming to a satisfactory understanding. * * *

I do not think that any further steps will be taken by the other representatives, until the question has been considered by the Governments they represent.

I do not see how we can with advantage pursue the discussion beyond this point, until the powers come to an understanding as to how far they will go to secure their undoubted treaty rights; and I am therefore disposed, so far as our legation is concerned, to proceed no farther in the matter, but to submit myself to your guidance as to what the Department feels to be our rights under the treaties and the best means of securing them.

The general questions discussed in the dispatch of his imperial highness, and the special incident affecting Mr. Wetmore and his cotton yarn company, the legation holds to be different and distinct propositions. While I am willing therefore to let these questions rest in abeyance until the Department in its wisdom decides what is best to be done, I shall continue to insist to at whatever maybe the result of our discussions as to the construction of the treaties, even if we granted every point for which his imperial highness contends, the treatment of Mr. Wetmore* * * cannot be overlooked in the interests of that unity and good will which have so long existed between China and the United States.

To this I shall refer in a subsequent dispatch. In the meantime, trusting that the course taken and proposed to be taken by the legation will meet with your approval,

I have, &c.,

JNO. RUSSELL YOUNG.
[Inclosure in No. 116.—Translation.]

Foreign office to the foreign ministers.

In the course of the tenth moon of the current year (November, 1882), we had the honor to receive a joint note from their excellencies the representatives of the treaty powers residing at Peking, in which three different points were discussed at length, viz:

1. That the expression “industry” (Chinese, kung tso) contained in the treaties, referred to the permission of subjecting native produce to a manufacturing process; 2. That foreign merchants, on paying the same duties as Chinese merchants, were at liberty to resell, according to their own pleasure, at the ports, native produce purchased [Page 189]by them; 3. That certain manufacturing monopolies lately granted, were not in accordance with Western usages in reference to monopolies.

The general tendency of the joint note, therefore, was to claim for foreign merchants certain advantages which for more than twenty years they had not been enjoying, a claim which, if granted, would in reality cause the livelihood of many hundreds, nay, thousands of Chinese merchants, a livelihood which they had been enjoying from the very beginning, to be encroached upon and seriously damaged.

We shall therefore now take the liberty to expound the matter to your excellencies at length, according to the treaties. The seventh article of the French, the sixth article of the German, and the eleventh article of the Belgian treaties grant the right of “living” or “residing,” “trading,” and “working” “in peace” and “without hindrance.”

These are general expressions. In later paragraphs the special condition under which houses may be built in order to live in them, under which goods may be purchased and sold, and under which laborers may be engaged for working purposes, are explained at more length in separate articles. If, now, your excellencies say that, as the engagement of workmen is mentioned in another article, the expression kung tso must refer to something else, we beg to ask whether in this case the right of “living,” or “residing,” and “trading,” must likewise refer to some other matters? This alone suffices already to show that the expression kung tso cannot be explained as being identical with “subjecting native produce to a manufacturing process.” If, further, the Khang-hi dictionary is referred to with regard to the meaning of the character kung we find there that it means “skilled in his own works,” and further a ‘mechanic,” or “artificer.” All these explanations evidently refer to people living by the work of their hands, but they do not refer to produce wrought into new articles by a manufacturing process. Even the French word Industrie, which in this passage of the treaties is the French translation [sic] for the character kung tso, is explained as meaning “the skillful execution of some handiwork,” or as meaning “a craft or handiwork by which somebody gains his livelihood.” The meaning of the French term, therefore, even in its widest application, does likewise not clearly imply the act of subjecting native produce to a manufacturing process. Only by a forced interpretation, therefore, this meaning can be found in the terms in question or rather imputed to them. Though further it is stipulated in the French treaty that the original text shall be decisive for the interpretation [sic], still in the English as well as in the Danish and German treaties, it is said that the Chinese and English and the Chinese and German texts, respectively, had been carefully compared and found congruous. And in the treaty of the Netherlands, as also in the Italian and Spanish treaties, there are articles according to which the text in its own language shall be decisive for each party, and “each party shall consider the text in its own language as the authentic one.” The Chinese Government under all circumstances must be guided by the Chinese text, and the meaning of the expressions kung tso and Industrie, in Chinese as well as in foreign languages, is clear enough and easy to understand. And herein lies one proof that this term cannot be adduced as an argument for the claim of being permitted to carry on manufacturing professions of the kind above specified. As regards articles of international commerce, nothing is more minute in all its details than the tariff. Now, native produce may be purchased by foreign merchants in the interior; it may be exported by them; it may be carried coastwise by them. Therefore there is a transit duty; there is an export duty; and there is a coast-trade duty; but the treaties may be searched everywhere and no “sale-within-port duty” will be found in them. If therefore it is suddenly maintained at present that on paying the same duties as Chinese merchants a sale at the ports may take place, this is an endeavor to augment the stipulations of the treaties which have been carried out everywhere since many years, by the introduction of this new practice. To allow this to be done without further notice is impracticable indeed.

According to the fifth article of the “general rules for the Yangtse,” further, goods which are not imported have to pay two and a half times the tariff duty. Also, his excellency Mr. Von Brandt, in his former negotiations with the yamên, agreed that goods bought under transit pass, if not exported, should be fined by paying two and a half times the tariff duty. If, now, permission were granted to manufacture new articles and to sell goods at the ports, who would henceforth care to export the original produce? Consequently the duty already agreed to in principle, equal to two and a half times the tariff duty, would lose the elementary conditions of its existence. And would not the stipulations of the treaties be rendered nugatory? Herein, therefore, lies another proof that, carefully considering and studying the matter in the light of the tariff, there are likewise the gravest objections against permitting native produce to be subjected to a manufacturing process. It must be borne in mind that, when Chinese subjects let “merchants” (but this term is of wider application in Chinese than in foreign languages) begin to manufacture articles for sale, the permitting them or forbidding them to do so depends solely on the decision of the authorities. [Page 190]Now, as foreign merchants in the open ports of China, and in the interior, are not, in the same way as Chinese merchants, under the jurisdiction of the Chinese authorities, it is of course impossible to deal with them in the same way as with Chinese merchants. When Chinese merchants beg to be allowed to do something; either permission maybe granted to the one and refused to the other, or permission may be granted at first and then retracted merely according to the independent resolves of the Chinese authorities, without any interference on the part of the Consuls in the Chinese ports.

Now, as regards the association of Chinese merchants at Shanghai for manufacturing cotton goods, this is quite a new undertaking for China [literally, “an undertaking which now for the first time is seen in China”]. The high provincial authorities, in consideration of the great efforts made by the members of this association-in trying such a thing for the first time, have sanctioned the undertaking and reported in this sense to the throne—and lest dishonorable merchants; [literally, “merchants having no regard for what is honorable], seeing that others had successfully commenced something, should try to wrest their lawful profits from them by competition, the provincial author! ties have further granted to the association a term of ten years, within which others should be forbidden to form a similar association by the competition of which the interests of those who had made the first trial might be seriously damaged. The action of the Chinese officials in this case has therefore been based on a careful consideration of the special circumstances of the matter, and at the same time guided by a desire to guard against future abuses. How, then, could it be said that the provincial authorities had thereby usurped rights not belonging to them, or that they had been guilty of a one-sided partiality?

As regards foreign merchants, their profits from import and export trade, in conformity with the last twenty-odd years have been considerable enough; why, therefore, should they now again be permitted to compete with those Chinese merchants who, by way of experiment, have formed an association? And how further can it at alt be permitted on Chinese territory, the regulations on native produce not having been at all convened and put into practice to manufacture other articles out of cotton thread, raw silk and the like, for the purpose of selling? And herein lies another proof that, on considering, and carefully, the matter from the standpoint of Chinese commercial interests, there are likewise the strongest objections against permitting foreign merchants to subject native produce to a manufacturing process.

To resume, those things that are unmistakably pointed out in the treaties have already for a long time since been every where put into practice, but as regards those things that are not pointed but in the treaties with unmistakable clearness, they cart; only be made a subject of mutual deliberation, after it has been proved that they are not detrimental to either party. The former negotiations of his excellency Sir Thomas Wade, when he agreed to the lekin tariff duty on foreign merchandise being simultaneously levied, had already led to a mutual understanding, and though on account of the opposition on the part of foreign merchants the matter has come to a standstill, yet difference of opinion there is none with regard to it. The negotiations of his excellency Mr. Von Brandt on native produce have likewise been successful with regard to the main points; only in the matter of the fabrication of hew articles by a manufacturing process the treaties obtain ho express stipulation permitting such a thing to be done; the vital interests of the Chinese merchants are affected thereby; we have reiteratedly conferred on this point with their excellencies the superintendents of trade for the northern and southern ports, and with the high provincial authorities of the Empire, and they say with one voice that this can by no means be conceded. Therefore, after the most mature and frequently repeated consideration, our yamên has come to the conclusion that it is really quite impracticable to agree to it.

Their excellencies the representatives of the treaty powers are all of them intuitively acquainted with the spirit of the treaties; they know perfectly well that it is the right and duty of all Governments to protect the commercial interests of their subjects. On the other hand, in all matters brought before us by any one of the foreign representatives, our yamên has always been animated by a desire to act in a manner consistent with the existing friendly relations: that is to say, mutual regard for each other’s interests and a wish to uphold amicable intercourse, have always been the bases of our action. But if things which are utterly unfeasible shall be forced upon our acceptance, we think that not only the Chinese Government is not in a position to negotiate on such measures, but, generally speaking, no country in the world can justly force a friendly power to disregard the commercial interests of its own subjects; and even if a question of this kind were submitted to the Government of the country specially concerned, or to the Governments of other countries, we are convinced that they would judge of it in a spirit of equity.

We beg all their excellencies, the representatives of the treaty powers, to consider our above remarks maturely and with impartial minds.

The Prince of Kung and the Ministers of the Tsung-li Yamên.