No. 40.
Mr. Young to Mr. Frelinghuysen.

No. 398.]

Sir: In my dispatch No. 297, dated November 30, 1883, I informed the Department that I had on that date sent a circular note to the gentlemen in our consular service asking them to send me certain information in reference to the petroleum trade in China during the year 1883, an more especially as to whether there was any renewal of efforts on the part of the authorities to suppress the trade by repressive proclamations.

I have received reports from all the consulates with the exception of Amoy. * *

It was my duty to address special instructions to Mr. Win gate, at Foo-Chow, and Mr. Seymour, at Canton, expressive of the views of the legation as to special circumstances which had arisen within their jurisdiction.

Certain facts appear which I may venture to summarize.

Mr. Cheshire sends a valuable table showing, as a part of the movement of petroleum in Shanghai, the import of oils into open ports chiefly supplied from Shanghai during the year 1883. From this it appears that there has been anincrease at Tien-Tsin, Kiu-Kiang, Hankow, Wuhu, and Chin-Kiang; a decrease at New Chwang, Chefoo, Ningpo, Wênchow, and the country around Shanghai. The increase amounts to 101,944 gallons, the decrease to 62,997, showing a net increase of 38,947.

These figures can hardly be accepted as a test, although, as Shanghai is an important distributing point, they have value. Mr. Cheshire has not had occasion to complain of the proclamations against the use of petroleum in Shanghai, which gave Consul-General Denny so much annoyance. The authorities have learned to welcome the oil in a liberal spirit; but by the lekin system, which adds so many embarrassments to internal trade, the sale has been diminished. The local authorities in the country around Shanghai levy a tax of 5 cents on each case passing into the interior, a tax which until recently has never been imposed. In spite of this temporary interruption, Mr. Cheshire notes the gratifying fact that the trade during the past six years shows a steady advance.

From Tien-Tsin, the most important city in Northern China, and in which might be included Peking, we learn that in 1883 398,340 gallons were received. This is a large gain over the import of 1882, namely, 284,130. In 1882 Tien-Tsin showed a falling trade, in 1883 a rising trade. Mr. Pilcher notes a large import in native junks, the amount of which does not appear in the customs returns. He estimates it, however, as in value about one fifth of the whole. In Tien-Tsin the oil is mainly a re-exportation from Shanghai. I think it would bean advantage to the petroleum interest if the oil could be sent in bulk direct to Tien-Tsin; it would save the cost of transhipment in Shanghai, and enable the people to buy at a cheaper rate. I note also that the retail trade is largely in the hands of the Chinese shopkeepers. This I regard as an advantage. Mr. Pilcher points out the fact that while the native candles, made from mutton and beef tallow, can only be manufactured at a cost of 15 cents per catty, kerosene is sold at 6 cents per [Page 85] catty. There is an economy in this fact which cannot fail to make a deep impression upon the thrifty Chinese mind.

From New Chwang, a small northern port, the legation learns that although Shanghai reports a decrease in the shipment, there has really been an increase in the trade of 1,715 gallons. This is a modest advance, but the Department will see that it arises from commercial apathy, and not because of the opposition of the authorities or any indisposition on the part of the people to use the oil. This is seen in the fact that while during last summer oil could be purchased at $2 a case, there is none now in stock, and the last retail price was $5.50 a case.

I regret to note that in Ningpo there has been a falling off of 188,470 gallons as compared with the return for 1882, which showed an import of 1,505,470 gallons, an increase of 49,279 gallons over the preceding year. When I wrote you in regard to petroleum in my dispatch No. 133, dated February 20, 1883, I alluded to the evil effect, upon the trade of the antagonism of the authorities at Ningpo. As this antagonism, or at least any apparent evidence of it in the way of unfriendly proclamations or governmental intervention, had passed away, I was in hopes to hear of a large increase in the importations for 1883. Mr. Stevens does not explain this disproportion except upon the theory of commercial fluctuations. * * *

Mr. Bergholtz, the vice consul at Chin-Kiang, sends a lucid report as to the trade. I attach much importance to the condition of the business at these interior river ports, as thus we can measure its movement towards the central divisions of the Empire. Petroleum must depend for its stability and growth upon its general acceptance by the great mass of the people. Therefore much more is to be learned from the statistics of a small river port like Chin-Kiang than from a commercial emporium like Shanghai. Mr. Bergholtz points to the interesting fact that while in 1868 the import was only 90 gallons, in 1883 it was 389,090 gallons. And in looking over the valuable table of figures in which he shows the movement of the trade, you will see that the growth has been steady, the increase in 1883 over 1882 being no less than 131,090 gallons. Mr. Bergholtz reports the existence of wells yielding a bituminous product, an “oil that burns in water,” and which comes from the salt-wells in such a quantity that sometimes as many as four or five jars of a hundred pounds each are collected in a day. This, to be sure, is a modest output, but it suggests the possibility that China in time will mine her own petroleum.

The importance 1 attribute to Chin-Kiang as a port showing the movement of petroleum towards the interior of China, and its gradual acceptance as essential to daily comfort by the people, will also apply to Hankow. Mr. Shepard’s report is therefore entitled to careful study. When we look at the figures the advance is most gratifying—in 1882,483,974 gallons; in 1883, 1,322,771, an increase of 173 per cent. A part of this Mr. Shepard attributes to the decrease in the supply of native oil, the crop of which was last year a failure. But while a better harvest of the vegetable native oils may limit our hopes for a continued advance, I hold it to be a controlling fact in the development of the trade in China that when once petroleum finds a place, becomes known to the people, and they appreciate its advantages and its economy, no native product will supplant it. Mr. Shepard makes the wise suggestion that “an illustrated popular treatise in Chinese would be of infinite service in making the nature, uses, and proper care of the article known, thus extending the demand.”

Foo Chow has been unfortunate in its relations to the trade, and I [Page 86] regret to learn from the report of Mr. Wingate that there has been a falling off in the import of 44,050 gallons in 1883, as compared with 1882. Even with this the importation was larger in 1883 than in any year, with the exception of 1882, since petroleum was introduced into China. The causes for this deficit are more to be regretted than the fact itself, for they show a determined opposition to the use of the oil on the part of the authorities. He reports the virtual subsidence of the panic of 1882, and that the proclamations against petroleum had become a dead letter. As a result of this he looked for a still further increase of the trade.

It unfortunately happened during the summer and fall of 1883 that there were several fires in Foo-Chow to be attributed to petroleum. The most disastrous was caused “by a man filling a kerosene lamp while it was burning. The oil ignited, the man, alarmed, threw the lamp into the open kerosene can, and the loss of a hundred houses and six lives followed.” This and other fires less disastrous excited the “gentry” and the “literati,” and proclamations were reissued, not to become a dead letter, as those of 1882, but to be enforced. So strong is this feeling that although in Foo-Chow, as in all other parts of China where petroleum has made its way, the people like the oil for its cheapness and brilliancy, and the shopkeepers because it is a steady source of business profit, the mandates of the authorities have been obeyed, as is seen in the falling off of the import and the sudden arrest of a flourishing trade. Mr. Wingate reports a fall from 160,000 gallons in April, May, and June to 2,800 gallons in October, November, and December—practically a destruction of the trade.

These facts have caused me much anxiety. * * * The tone of the proclamations which Mr. Wingate forwards shows that the panic, like other panics, was violent and widespread. “Kerosene means ruin!” “Kerosene is a fierce calamity!” “The benefit does not make good the harm!” “For those who offend there will be no pardon!”

The difficulties of the situation were not to be regarded without sympathy. There had been many fires; property had been destroyed, lives had been lost. Nor was a disaster of this kind and from a similar cause a new incident in Foo-Chow. The magnitude of the present calamity could not be underrated. Those who understand the customs of China can see How such a danger is possible. A dense population; small houses, fragile, easily burned; narrow streets; society without the knowledge or the organization to arrest a fire—in such a community a fire means far more than it does in our cities of brick and stone. We know from sad experience what fire can do with brick and stone.

I saw no reason for making representations to the yamên against these proclamations. They really belong to what might be called the commune system of China. As I discovered when the legation acted upon the representations of Mr. Consul-General Denny in 1882, there was no national policy of antagonism. * * * This view was strengthened by the remembrance that at Ningpo, Shanghai, and other points where there had been opposition it was silenced, that the trade showed a steady increase, and that it would be better to deal with Foo-Chow as an isolated case, and not accept counsels which found inspiration in a panic as in any way expressing the policy of the cabinet.

I requested Mr. Wingate to dwell upon certain points, and in dealing with the abstract question of petroleum to show that it was not as dangerous as gunpowder, which is one of the common elements in Chinese industry; and as the Chinese had learned to handle gunpowder with impunity, in time they would learn to do the same with petroleum. I [Page 87] thought, on the other hand, that our merchants who deal in this oil should take pains to furnish as safe a grade as possible. I quite understand that an absolutely safe oil would be as useless as water, and that the quality of lire which generates light and heat, and which is the essential quality in a burning oil, is naturally an element of danger. No oil should be sent here that is not of as high grade as that sent to India and Japan. The merchants should take pains to develop their trade on broad and humane lines; and nothing would do more towards that than to adopt the suggestion contained in the dispatch of Mr. Shepard.

The petroleum interests at home have been well served by Mr. W. H. Lib by, an American gentleman who came to Asia to represent the petroleum interest. Mr. Libby entered upon his work with intelligent enthusiasm, and in the many conversations and communications with which he has honored me seems to possess the true idea of pressing this most important interest in China. I attach much value to the work which that gentleman has done in China, and therefore deem it worthy of special commendation to the Department.

While an event like this at Foo-Chow has a disheartening effect, it is to be considered as among the incidents that attend the introduction of a new article to a conservative community. In a country where the people for ages have used vegetable and fish oils, whose artificial light forms a minor part in the domestic economy of the household—a people so little affected by change that you find among the coins of commerce pieces which were stamped before the Christian era, you must expect distrust when you propose any innovation, however slight. Such a thing is not altogether unknown in more civilized communities. I am convinced that in dealing with circumstances like those at Foo-Chow we must use patience and do what we can to persuade and instruct the people. The yamên would regard any application with indifference. It might arouse a different sentiment and lead to a general policy throughout the Empire that might add further obstacles to the trade.

In Canton there is a different state of affairs. The viceroy of the two provinces has farmed out the sale of petroleum to a Chinese firm or monopoly, and in order to strengthen the monopoly a special tax of 40 cents is imposed on each case. The imposition of this tax I hold to be a direct violation of treaty. As explained in my dispatch No. 297, dated November 30, 1883, I brought the subject to the attention of the foreign office in a note of that date addressed to his imperial highness Prince Kung. As an illustration of the delays attending the transaction of official business with the Chinese, although nearly four months have passed no reply has been received. I have made requests informally for an answer from the foreign office, but without avail. Ten days ago I sent Mr. Holcombe to the yamên to intimate that in my judgment the legation had waited long enough, and that it was time to have some expression of opinion from his imperial highness. I was informed that renewed orders had been sent to the viceroy at Canton to make a report, but that until that report was made the Government could not act. The close of navigation would naturally make communication tedious.

Mr. Seymour explains that he has not had a “favorable opportunity to resent the kerosene claim advantageously, on account of military operations, mobs, outrages, &c.” While I recognized the burdens which had been thrown upon the Canton viceroy on account of the exceptional condition of affairs in the south, still it seemed that our patience had stood a sufficient test. I have, therefore, as you will note, requested Mr. Seymour to press the matter upon the attention of the viceroy.

I am not sanguine that these representations will be successful either [Page 88] with the yamên or the viceroy unless the Governments interested are firm. The tendency of the central Government to permit the provincial authorities to manage financial affairs, taxation, raising of loans, and disbursements of money, so as not to embarrass the imperial treasury, makes it difficult to have a considerate hearing for any question of this kind. The answer will always come that the money is necessary for the government of the province. When the legation received the Ward claims, the money did not come from the Government, but from the war appropriations of Li. The Canton viceroy will pay the indemnity from local sources, loans in Hong-Kong perhaps, guaranteed by taxes on salt or some special monopoly. But while these are considerations which belong to the Government of China, and do not especially concern us, * * * in the case of the tax on the importation of petroleum our rights are clear and undoubted. As I went into this question at length in my dispatch No. 297 and in my note to Prince Kung, I shall not detain you by a repetition of the arguments therein set forth.

In my dispatch No. 297 I referred to the proposal of the Chinese authorities to adopt a series of rules for the government of the trade throughout the Empire. Sir Robert Hart informed me in conversation that the new rules would not go into operation until 1885, and that he had written to America for the fullest information, so that when the rules were made they would serve the best interests of the revenue and trade.

* * * * * * *

I have, &c.,


P. S.—Since writing the above I find I was in error in saying that I had received no report from Mr. Goldsborough, our consul at Amoy. The report, which is hereby forwarded, was made with due promptitude, and was overlooked by me in preparing my inclosures.

The Department will note that there has been a marked increase in the import at Amoy, and that the trade since 1880 shows a slow but steady advance. It is a further gratification to know that, as reported by Mr. Goldsborough in January, 1883, there has been no attempt on the part of the authorities to interfere with the petroleum trade.

I have, &c.,