No. 351.
Mr. Bell to Mr. Bayard.

No. 88.]

Sir: I have the honor to acknowledge the receipt of your No. 30, of December 8, saying that the attention of the Department has been called to a measure now before the States General of Holland, which if adopted will increase the duty on refined petroleum imported into the Dutch colonies from 5d. to 1s. 6d. per case.

I would respectfully invite your attention to my No. 57, of October 15, and also to my No. 72, of November 16, in which I made a full report of the contemplated changes in the tariff, and especially alluded to the proposed tax on petroleum by which, as I stated, the Government hoped to realize a revenue of 800,000 florins. * * *

Immediately upon the receipt of your dispatch I addressed a note to the minister of foreign affairs (copy of which is inclosed), and in order to secure prompt attention brought it to him myself.

In delivering it, I called particular attention to the various points it contained. He at once replied emphatically that the projected measure was by no means intended to discriminate against American petroleum, and in fact that it would distress the Government of the Netherlands to a greater extent even than the Government of the United States, if any measures should be adopted which would in the slightest degree detract from the shipment of petroleum.

He thought that such a result would utterly defeat the purpose of the law, as it was entirely based upon the desire to increase the revenue of the colonies and must be regulated as a fiscal measure, and not as a desire to restrict commerce.

His Excellency then referred to the deficit in the colonial budget, and the distress existing amongst the planters. With a view to afford some relief to the latter he stated there was a project to reduce the export tax on coffee, tea, and sugar, by which act the deficit in the budget would be still further increased.

In order to provide for this deficiency, it was necessary to tax some article which would yield a revenue, and the burden of which would at the same time be generally distributed.

I then informed him that the project of such a duty produced upon my Government the impression of an unfriendly act, in view of the liberal concessions which they had made in favor of Indian produce, and more especially so as petroleum was exported principally, and I might might say only, from the United States.

His excellency then remarked that the bill regulating this tax had not yet been distinctly formulated, and that he would have a further consultation with his colleague, the minister of finance, and that it might be so arranged as to collect the equivalent revenue by means of an excise law, which would equally answer their purpose.

I replied that whilst such a method might be preferable to a direct tax on imports, it did not meet all the features of the case, as possibly there were other articles procurable in the colonies which, owing to the increased price in petroleum, might enter into competition with it, and that, at all events, the increased price would tend to decrease the consumption.

He assured me that there was neither any article in the colonies nor any article (under the proposed tariff) capable of importation into the [Page 738] colonies which could in any measure compete with petroleum in its most ordinary use, and that, in fact, it was an actual necessity.

His excellency then alluded to the question of Sumatra tobacco, and said on this point “I expect soon to have a conversation with you of quite a different nature, as other principles are involved.” Recalling our previous conversation, he added that he understood that it was contemplated to place duties on tobacco in the United States, which would directly discriminate against Sumatra tobacco, and that it would be done in order to protect certain agricultural interests.

I replied that I knew nothing of the matter beyond what he himself had told me, but that the constantly-increasing figures of export would seem to indicate a profitable industry, and, moreover, that I had seen it mentioned in the Rotterdam papers that some of the Sumatra tobacco companies had declared annual dividends of over 100 per cent., which suggested that it was not a commerce which required material protection from the Government.

To this he answered that the Government derived no direct benefit from it, as the tobacco industry in Sumatra was entirely a private enterprise, and not, as the coffee culture in Java, a Government monopoly.

On taking my leave he again expressed his desire that I should inform my Government that he trusted that nothing could possibly occur which would detract from the commerce in petroleum, and that he would shortly send me a written answer to my communication.

The press of this country are devoting considerable space and time to the discussion of the Sumatra tobacco question, and especially to rights of the Government to invoke the aid of the “favored-nation clause” of the treaty of 1782 in case of an attempt on the part of the United States to levy further duties on tobacco which may or may not discriminate against the Sumatra article.

From the official correspondence of Mr. Fish with the Dutch minister at Washington (Foreign Relations 1873) it seems that the Government of the United States have for some time maintained that “the venerable document” known as the treaty of 1782 with the United Provinces is not in force. * * *

I shall feel obliged in case you have examined into the question for an expression of your views as to whether the treaty in question is still in force, and for any other or further advice you may have to impart in connection with this Sumatra tobacco agitation.

I have &c.

[Inclosure in No. 88.]

Mr. Bell to Mr. Van Karnebeek.

Sir: I have the honor to inform your excellency that I have been instructed to apprize His Majesty’s Government of the fact, that in the opinion of the Government of the United State the measures now before the States General providing for an increase of duty upon refined petroleum imported into Dutch colonies from 5d. to 1s. 6d. per case, will if adopted be prejudicial to the commercial relations at present existing between the two countries.

It is the policy of the Government of the United States, by a judicious legislation as well as by any other means in its power, to encourage the growing trade between [Page 739] the two countries, a policy which I believe has hitherto had the earnest concurrence of the Government of His Majesty.

The proposed duty, however, under existing conditions of trade, virtually amounts to a prohibition upon the importation of petroleum into the Dutch colonies, and cannot, therefore, be regarded as being levied for revenue purposes.

There is no native product in either colonies or mother country that needs protection or that is able to supply the place of petroleum. The measure cannot, therefore, be regarded as one of protection.

As there is no country on either continent, apart from the United States, that can furnish an illuminating oil of such a high quality as is now imported into the Dutch colonies, it is not surprising that the Government of the United States should regard the proposed duty as one leveled directly against trade interests of my country.

In the year 1885 the total imports into the United States from the Netherlands and her colonies amounted in value to $9,566,427. Of this total $5,414,599, or more than half, was subject to no duties whatever under the tariff of the United States.

The showing is even more striking when the trade of the colonies alone is considered.

Of a total import trade from the Dutch, West Indies of $3,261,671, more than 91 per cent., or $2,991,490, was admitted free of duties.

In the trade with the Dutch East Indies the imports not subject to duty were more than seven times as large as those on which duties were assessed.

In the trade with Dutch Guiana only one-fifth of the imports paid duties at our custom-houses.

Few countries of Europe are so little affected by the tariff of the United States as the Netherlands.

The United States in 1883 removed all duties from spices, which formed, next to sugar, the chief article of export from the Dutch colonies, and this repeal resulted in conferring substantial advantages upon those colonies by throwing open to their products an extensive and rapidly increasing market.

The advantages already secured by the Government of His Majesty through the legislative action of the United States should be taken as an earnest of a wish on the part of the United States to remove restrictions upon trade, and to invite and encourage an increase of the commercial relations between the two countries.

The proposed increase in the duty on petroleum imported into the Dutch colonies can only be regarded as a measure of a contrary tendency, and calculated not only to impede but to destroy an extensive commercial interest which can exist only through the mutual advantages accruing through it to both parties to the exchange.

The importance of the trade in petroleum between the United States and the Dutch colonies may be seen from the following facts:

During the fiscal year ending June 30, 1885, the value of the total exports of domestic merchandise from the United States to the Dutch East Indies was $2, 103,066, and to this total petroleum contributed $2,024,732. The entire export trade of the United States to those colonies may thus be said to rest upon this one article.

The importance of this commodity in the trade with the Netherlands and the other colonial possessions of that country is somewhat less, but still of no small proportion. Of a stated export trade to the Netherlands of $16,634,1 37petroleum forms nearly one-eighth, $2,047,597.

The prejudice arising from the proposed change in duties would not be confined to the trade between the United States and the Dutch colonies, but would also affect injuriously the commercial relations between the United States and the mother country.

This injury would not apply to petroleum alone, but to general commerce, when the interests at stake are far greater.

To level a blow at so important an article of export as petroleum is to the United States must create a prejudice against the nation that struck the blow.

The present measure threatens a direct loss in petroleum of upwards of $4,000,000, and involves an indirect loss of an unknown extent upon the import and export trade between the two countries, which, without petroleum, amounts to more than $25,000,000 annually.

These considerations, and others which might be mentioned, show that the proposed measure if adopted will be a cause of dissatisfaction in the United States and may lead to serious embarrassment in the commercial relations of the two countries. I have therefore the honor to invite your Excellency’s attention to the subject, with the hope that an examination of the question by His Majesty’s Government will result in the abandonment of a measure so much in conflict with the views entertained by the Government of the United States.

I seize this opportunity, &c.,