No. 351.
Mr. Bell
to Mr. Bayard.
The Hague, December 22, 1885. (Received January 4, 1886.)
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.