to Mr. Bayard.
The Hague , January 21, 1886. (Received February 3.)
Sir: In my No. 88, of the 22d ultimo, I transmitted a copy of my note of the 2ist ultimo to the Netherlands foreign office, in which I had embodied the substance of your instructions of December 8 last, and [Page 742] at the same time I reported my conversation with the minister of foreign affairs at the time of the delivery of the note in relation to the pending project of this Government to increase the duty on petroleum imported into the colonies of the Netherlands.
I now have the honor to report that the minister of foreign affairs, in reply thereto, sent me a communication on the 18th inst., of which I inclose herewith a translation.
This communication fully confirms the information which I have from time to time been able to send you in relation to the view of this Government with regard to the pending measure.
In the future consideration of this question it seems to me important to note that the minister of foreign affairs has expressed his regret that the remonstrance should have been formulated while the ministerial project proposing the increase of the duty on petroleum was pending before the States General.
In my interview with his excellency I have been careful to keep clearly in view the fact that the remonstrance related to the supposed effects of a projected measure and not to the result or operation of existing laws.
It will be seen that the minister of foreign affairs questions the correctness of the figures mentioned (as the rate of duty) by the Department, and maintains that it should be stated at 1s. 2d. per case instead of 1s. 6d.
The rate actually proposed is 2 florins per hectoliter, which, according to my calculation, is equivalent to 80.8 cents for each 22 gallons.
In view, however, of the position of his Excellency the difference of calculation is of slight consequence.
He claims that the proposed measure is purely fiscal in its nature, and should not be regarded in the character of a blow at the commerce of the United States; that the Government of His Majesty have relieved certain industrial and agricultural interests of taxation, and in compensation therefor have been forced to levy a duty on other products to regain their losses.
As an evidence of the fiscal nature of the proposed project he cites the fact, before referred to by me, that the minister of the colonies is now consulting with the colonial authorities with a view to a change of the project from an import duty to an excise tax, and suggests that if such a course is adopted it will be a still further proof that the project is not intended as a prohibitive measure or a blow at the commerce of the United States.
If such a step is now taken it seems to me that it should, in all justice, be regarded as a positive guarantee of the earnest desire of this Government to so shape their fiscal legislation as to foster and encourage the petroleum trade.
He maintains that a duty of 2 florins per hectoliter will not diminish the importation of petroleum into the colonies, for two reasons:
- That the article is indispensable.
- That the population can without any inconvenience support the additional charge.
It has occurred to me that, in view of the fact that the remonstrances in question relate to the supposed effect of a projected measure, this position raises an issue which cannot be determined by argument, but only by the actual operation of the measure when it becomes a law.
His excellency maintains that the minister of the colonies (who has bad years of personal experience in the colonies) has, after consultation [Page 743] with well-advised authorities in the colonies, reached the conclusion that petroleum will stand the proposed tax without any diminution of the imports, otherwise the object of the Government would be defeated.
This position, it seems to me, is not to be controverted by argument.
It will also be noticed that he maintains that a prohibitive character should not be attributed to the project, and has in support of this view cited the provisions of the treaty concluded November 18, 1884, between the United States and Spain, which provided for the admission of petroleum info Cuba and Porto Rico at what he maintains was a higher rate of duty than 2 florins per hectoliter—that now proposed by the Netherlands.
The provisions of that treaty cannot, in my opinion, be successfully invoked in aid of his Excellency’s position for several reasons, among the most important of which I may mention—
- The treaty has not been ratified,
- The difference in freight and insurance, as well as the difference in the condition and circumstances of the inhabitants, may operate in such a manner as to make the duty prohibitive in the Netherlands colonies, whilst it remained oppressive only in Cuba and Porto Rico.
It will appear to you, I think, on reading it, that the distinct avowal of the minister of foreign affairs that the Netherlands colonies can and will pay this additional duty without inconvenience to themselves and without injury to our commerce, and that this point was carefully and thoroughly considered by the Government before formulating this project, precludes the further discussion of the conjectural effects of the measure, especially as his Excellency has already expressed his regret that the remonstrance should have been formulated at this stage.
It will be noticed that he has reserved exceptions to the accuracy of the statistical figures presented by the Department in regard to the commerce between the United States and the Dutch West Indies.
It will also be seen that he claims that the liberal treatment of American products in the Netherlands guarantees a moral right to expect similar treatment for the Netherland products in the United States, and after referring to the long-continued efforts of this Government to successfully invoke the aid of the provisions of existing treaties in behalf of their colonial products, cites the case of Sumatra tobacco to show that the legislation of the United States was shaped with the openly avowed purpose to strike that article, and expresses the hope that the good intentions of the United States may take a practical shape by defeating the purpose of the parties who are at present strongly agitating a further blow at Sumatra tobacco.
In relation to the Sumatra tobacco agitation I have to submit the following observations for your consideration.
The cultivation of tobacco on the island of Sumatra on an extensive scale may be said to date its origin from the organization of the Deli Company of Amsterdam, February 19, 1870, which had for its capital $200,000, and for its object the clearing and cultivation of land situate near Deli, on the eastern coast of Sumatra.
I have not been able to obtain the early returns of this company, but it is reasonable to suppose that the profits were large, for on the 9th June, 1877, another company, the Arendsburg, having a similar object and with a capital of $400,000, was organized at Rotterdam.
The figures at hand, which were obtained from reliable sources, show that the Deli Company has paid the following dividends, in addition to [Page 744] the accumulation of a reserve fund of double the capital, for the following years:
The Arendsburg has declared the following dividends:
|1879–’80 (the second year of its organization)||22½|
There are no data at hand to show the amount of the reserve fund accumulated by this company.
It will be noticed that his Excellency maintains that the United States, in the year 1883, have seen lit to insert in their tariff a special provision with the object openly avowed to trammel the importation of Sumatra tobacco.
The section referred to by his Excellency reads as follows:
Leaf tobacco of which 85 per cent, is of the requisite size and of the necessary fineness of texture to be suitable for wrappers, and of which more than one hundred leaves are required to weigh a pound, if not stemmed 75 cents per pound; if stemmed $1 per pound.
As his Excellency here remarks, the object of this measure was well understood.
In acknowledging the note of the minister I have limited myself to saying that I would forward a copy to the Department and await its further instructions before making a reply thereto.
I have, &c.,