Mr. Olney to Mr. Denby.
Washington, February 27, 1897.
Sir: I have to acknowledge the receipt of your No. 2670, of the 4th ultimo. It incloses a copy of the report of the sectional committee on cotton mills of the Shanghai Chamber of Commerce, and asks instruction as to whether you shall advocate the views therein set out.
The report makes four suggestions:
- 1.
- That the cotton industry should be fostered by freedom from taxation; but if this be impossible, that “the duty or excise should never exceed the duty levied upon imported yarn, less the transit duty paid upon raw cotton which enters into its manufacture.”
- 2.
- That raw cotton purchased in the interior for treatment in the mills shall pay transit duty as if destined for export, and no other duty.
- 3.
- That imported cotton should be free from duty.
- 4.
- That foreign-owned mills shall enjoy the same privileges as native mills.
You state that it is apparent from the report that the committee looks chiefly to secure benefits for the foreign mill owner operating in China; that you are unable to see how the interests of the United States are to be forwarded by fostering cotton industry in China, and that, in your opinion, all questions affecting taxation of foreign goods should be treated together.
[Page 92]In these remarks the Department concurs.
Our treaty right is to introduce into China, for sale to Chinese, American manufactures at as low a duty and likin as the most favored nation, and to export Chinese productions with as little export taxation as possible. In order to export Chinese staples we should be allowed to conduct all necessary processes to that end—that is, set up silk-throwing mills, tea-packing hongs, etc.
It is not seen that the treaties give us a just claim to embark in competition with native factories to supply the native markets. Neither is it seen how we could, claim the right to set up cotton mills in China in order to make Indian cotton into cheap cloths for Chinese consumption.
The report of the committee is in favor of local manufactories (it matters not whether set up by Chinese or foreign capital) for the purpose of competing on the cheap-labor basis with foreign importations. Our interest is to keep foreign markets open for our manufactures.
There is, therefore, no occasion for you to advocate the views set out by the chamber of commerce, but you will continue to keep the Department advised of the views of your colleagues and the mercantile communities on this and kindred subjects touching the taxation of foreign trade in China.
I am, etc.,