Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 5, 1898
Mr. Dunn to Mr. Sherman.
Tokyo, Japan, May 12, 1897.
Sir: I have the honor to inclose herewith translation copy of a law promulgated April 27, 1897, for the encouragement of the direct export of silk, together with a note upon this subject addressed to me, as “doyen” of the diplomatic corps at this capital, by the Yokohama Chamber of Commerce, and my reply thereto.
I also inclose two clippings from the Japan Mail of April 2 last, relating to the new law.
I have, etc.,
law (no. 48) for encouragement of direct export of silk.
Article I. Any mercantile company composed, members and shareholders, of Japanese subjects and Japanese subjects only, engaged in the direct export of silk to foreign countries, and complying with the following conditions, shall receive money for the encouragement of the direct export of silk under the provisions of this law: The materials must be of Japanese manufacture. The materials must be stamped with a registered trade-mark. The materials must receive inspection, 500 kin or more at a time, at the inspection office, and pass the examination fixed by imperial ordinance.
Art. II. The quality of the raw silk and the sums of money to be granted according to the purpose of this law shall be fixed by imperial ordinance.
Art. III. Any person who shall receive money under the provisions of this law by fraudulent means shall be liable to a fine of not less than 200 yen and not more than 1,000 yen. He shall return the money so received and forfeit all right to the bonus herein provided for. Any person who shall be guilty of an attempt to violate the provisions of this law shall be prosecuted according to the law of criminal intent.
Art. IV. The penalties mentioned in the preceding article shall be inflicted upon the business manager or the member or members of the company responsible for the conduct of the company’s affairs.
Art. V. The detailed regulations for the enactment of this law shall be determined by the minister of the department of agriculture and commerce.
[Page 439]Appendix.
Art. VI. This law shall be enforced for a period of five years, from April 1, 1898, to March 31, 1903.
Promulgated April 27, 1897.
Yokohama, April 8, 1897.
Your Excellency:
I have the honor to hand you herewith a letter addressed to you as “doyen” of the diplomatic corps of Tokyo by the committee of this chamber, and to inform you that printed copies of the same will be forwarded to all the foreign representatives here.
I have, etc.,
His Excellency Edwin Dunn, etc.
Yokohama, April 8, 1897.
Your Excellency:
The committee of the General Chamber of Commerce of Yokohama desire to ask the attention of your excellency to the bill proposed by the Imperial Japanese Government, and passed at the last session of the Japanese Diet (but which has not yet received imperial sanction), providing for the payment to direct Japanese exporters of raw silk a bounty or subsidy upon their shipments from Japan to foreign countries.
This bill, as originally presented, allowed a bounty of 50 yen per picul on silk of best color and quality, 2 deniers variation; 30 yen per picul on silk of good color and quality, 3 deniers variation; 20 yen per picul on silk of fair color and quality, 4 deniers variation; which would amount, roughly, to about 6 per cent on the value of the best, 4 per cent on the value of the good, and 3 per cent on the value of the fair. Filature or reruled silks produced in this country.
The details were, however, altered in committee by the Diet, so that the amount of the subsidy and the classification of the silk have been left to be determined by the Government department of agriculture and commerce. According to article 1, the proposed bounty is restricted to Japanese subjects engaged in the direct export of silk to foreign countries.
It is not payable to the growers and reelers of silk, who might thereby be stimulated to improve their production (in which case no possible objection could have been taken to the measure), but gives to specially favored Japanese exporters a benefit not available to others. The grant of this bounty will, indeed, be injurious to the producer of silk, as the bounty-favored exporter will, by means of the subsidy which he receives, be enabled to sell his silk at lower prices than his competitors without incurring loss, thereby inducing a decline in value on the markets abroad, which must cause a fall also in Japan to the detriment of the growers and dealers in silk here.
The Imperial Government of Japan has for many years past expressed the desire to revise its treaties with Western powers on a footing of equality and upon principles of equity and mutual benefit; and in the new treaty signed in 1894 between Japan and Great Britain (Article I) it is expressly stated that the subjects of the contracting parties shall enjoy in the dominions and possessions of the other the same privileges and rights as native subjects, while Article VII states: “The subjects of each of the contracting parties shall enjoy in the dominions and possessions of the other a perfect equality of treatment in all that relates to bounties, facilities, and drawbacks.”
It is true that the provisions of the new treaty do not come into force until July, 1899, but it is surprising to see that while the Imperial Japanese Government is with one hand signing treaties according equality of treatment to Japanese and foreigners, it is with the other offering bounties to some of its own subjects that will directly injure the silk trade of the foreign residents of this country, a trade which their enterprise has fostered and trebled in importance during the past thirty years.
It is evident that the provisions of this bounty, proposed to be given for seven years, will be in direct conflict with the new treaties; and the committee of this [Page 440] chamber consider that they are also contrary to the spirit of the previous treaties between Japan and foreign powers.
The preamble to the Japanese-Austro-Hungarian treaty of 1869 expresses the desire of their majesties, the sovereigns of those countries, to facilitate the commercial intercourse between their respective subjects, and Article VIII states that at each of the open ports Austro-Hungarian citizens shall be at full liberty to purchase therein and export to their own or any other ports all manner of merchandise not contraband, paying the duties thereon as laid down in the tariff, and no other charges whatsoever.
In the form in which the bill has passed the Diet it will be obvious to your excellency that it is open to the Japanese Government to determine the amount of subsidy and the standard of quality in such a manner as might effectually render competition impossible on the part of foreign firms engaged in the silk export trade, and that the full liberty provided for in the treaty will no longer exist, and commercial intercourse will be impeded instead of being facilitated as called for.
The committee of this chamber venture to hope that your excellency will bring this question, which greatly affects a trade valued at some £4,000,000 per annum, before your colleagues, in the hope that concerted action on the part of the foreign representatives in Tokyo may result in the imperial sanction being withheld from a measure which would be unfair and injurious to the foreign merchants so long established in Japan, while being of no real benefit to the silk trade in other directions.
I have, etc.,
His Excellency Edwin Dunn.
Tokyo, Japan, April 17, 1897.
Sir: Referring to your communication of date the 8th instant, relative to the bill lately passed by the Japanese Diet providing for the payment of a bounty to the Japanese exporters of raw silk, which you addressed to me as “doyen” of the diplomatic corps, I beg to state that the foreign representatives do not consider that it would be expedient, under existing treaties, for them, as a body, to make any representation whatever to His Imperial Japanese Majesty’s Government in the matter.
I am, etc.,
- Edwin Dunn.
- W. B. Walter, Esq.,
Chairman of the Committee of the Yokohama General Chamber of Commerce.
The direct export encouragement law has evidently produced a very bad impression on the foreign merchants in Yokohama, as indeed was inevitable. If the Government aimed uniquely at improving the quality of Japanese silk, the proposed bounties should be given to the producer, not to the exporter. Of course, it is very well understood that a great part of the purpose of the bill is to put an end to the present system of intrusting silk, before sale, to the foreign local merchant, who takes it into his godown and employs his own experts to inspect it there. Such a system presents many objectionable features from the Japanese point of view, and the fact that it owes its origin to the untrustworthiness of the native sericulturist or middleman enhances rather than diminishes its irksomeness. But there is this indisputable fact to be considered, namely, that not the slightest chance exists at present of getting foreign manufacturers to buy Japanese silk unless it has been previously inspected and passed by foreign experts. When the Government offers a bounty to direct exporters, it does not assist the Japanese merchant to find a route by which his silk may reach Western buyers without the intervention of foreign agents or foreign inspecting experts; it merely devotes some hundreds of thousands of public money to transfer the place of inspection from Yokohama or Kobe to New York or Lyons. There are three Japanese firms now engaged in the business of direct export, and not one of them can get foreign manufacturers to buy a bale of silk until it has undergone foreign inspection. Will foreign manufacturers be more disposed to forego inspection because the Japanese exporter receives a bounty from the Government? The original idea was that they would. The original idea, so far as we can understand, was that since a bounty could not be obtained except by silk of [Page 441] very high quality, the fact that a bounty had been obtained would be in itself a guarantee of quality. In short, the Government proposed to put its cachet upon silk for direct export, hoping that by such a method foreign manufacturers might be disposed to accept Japanese inspection as conclusive, and thus the trustworthiness of the Japanese sericulturist and the competence of the Japanese inspecting expert would ultimately be established. Considered in that light, the law will be seen to be, not a deliberate means of discriminating against the local foreign merchant, but a plan for raising the status of the Japanese silk grower and silk inspector in Western markets. With such a motive the local foreign merchant himself will sympathize, but he can not be expected to forget that, in practice, the new law discriminates most injuriously against him, since it offers a premium for his exclusion from the silk trade; nor can he be expected to appraise the projected programme by any standards except those of hard common sense, which tells him that, whether the inspection on this side of the water be official or private, it will not satisfy foreign buyers so long as it is Japanese. The Government, we repeat, will simply find itself paying to have the foreign inspection done in New York or Lyons, instead of in Yokohama or Kobe, and if that be a proper object to compass, by a large expenditure of public money, we are wholly unable to detect the propriety. Everything that really tends to promote the development of Japanese commerce has at all times the hearty support of intelligent foreigners, even though some local sacrifice be entailed. But this direct export law is a mistake, a most unquestionable mistake, and while we are very fully persuaded that the officials of the department from which the bill emanated do not entertain any shadow of desire to discriminate against the local foreign merchant, we can not acquit them of having framed a measure that will so discriminate, and that will not conduce in any degree to the improvement of Japanese sericulture or the establishment of Japanese credit. For the rest, although nobody wants to obtrude sentiment into a purely practical matter, we venture to suggest to Japanese legislators the patent fact that they are going to work in altogether the wrong way when they endeavor to win the confidence of manufacturing and commercial firms in Europe and America by harsh and unwholesome discrimination against the long-trusted and zealous agents of those firms in Yokohama and Kobe. The impression produced abroad by this law will be of a nature to militate strongly against the very end that its framers have in view.