No. 389.
Mr. Comly
to Mr. Evarts.
Legation of
the United States,
Honolulu, July 30, 1880.
(Received August 17.)
No. 120.]
Sir: Referring to your No. 61, inclosing a letter
from Secretary Sherman, making inquiries as to the large importations of
foreign rice in the Hawaiian Islands, and whether all proper precautions are
taken to prevent the export of such rice to the United States from here as
the product of the Hawaiian Islands, I have the honor to report:
I have given my attention to this business from the first (vide dispatch No. 75*) as one of great importance to
American interests, whether such rice was brought here for export or not;
for, in effect, it acts simply as a release for the same quantity of
Hawaiian rice, to be exported to the United States free. Whether the foreign
rice is taken there, or it releases that much Hawaiian rice to be taken
there, would seem to be about “six of one and half a dozen of the other.”
The increase in the import of rice for the first quarter of 1880 was made
the subject of urgent representations to different members of the cabinet,
in conversations which I had with them, and also with Mr. Henry A. P.
Carter, late minister for foreign affairs, envoy extraordinary and minister
plenipotentiary to England, Germany, &c., and others not necessary to
name. The still greater increase for the second quarter emphasized my
representations, the total imports for six months being over a million
pounds.
I may as well say at the outset that there is no reason to suspect that any
of this foreign rice is or will be exported as Hawaiian rice. It is all fed
to the laborers on the plantations, who prefer it to the better and
[Page 607]
more costly Hawaiian rice. The
Hawaiian rice is a different species. It is much larger, finer, better, and
different in shape and appearance. I have no hesitation in affirming that I,
myself, being no expert, can pick out the Hawaiian grains from a quantity of
mixed rice, as fast as I could pick out grains of wheat from mixed grains of
wheat, rye, and oats.
The points I have insisted upon in my representations, therefore, have been
chiefly these: That these large importations must necessarily be looked upon
by United States officials and public as a constant menace of such frauds,
whether reasonably or without reason; and that, as above set forth, it made
very little practical difference whether this very same rice, grain for
grain, were sent to us, or only released Hawaiian rice to go in its place,
free of the duty the foreign rice would have paid into the United States
Treasury. I claimed that we were not only practically defrauded out of the
revenue on this foreign rice, but that we were made use of to add that much
more to the Hawaiian revenues, the Hawaiian Government, as matter of fact,
receiving 1½ cents on every pound of this foreign rice, and sending us pound
for pound in Hawaiian rice free of duty. The result of the interview, in
almost every case, is the expression of regret that rice was put in the
treaty at all.
I am told that there is neither Hawaiian nor any other capital or labor but
Chinese invested in rice here. It is totally in the hands of the
Chinese.
The sugar planters would all prefer to have Hawaiian rice pay duty in the
United States, and have their own purchases of Chinese, Japanese, or East
Indian rice freed from the Hawaiian duties. This would bring down the cost
of their own supplies, and would make even Hawaiian rice cheaper in the home
market, for the price of the home product depends upon San Francisco, at
present.
As the result of various informal interviews and conferences, not only with
officials but merchants, planters, and the like, a bill was finally drawn up
(by Mr. Carter, I believe), which provides for a tariff of 2½ cents per
pound upon all rice imported into this kingdom, an amount supposed to be
prohibitory, in fact, though by the British claimed to be so only as to East
Indian rice.
At the same time I sent, by suggestion, the letter, Inclosure No. 1,
herewith, and received the reply Inclosure No. 2. I also fully informed
Vice-Consul Hastings of the subject of this report, and asked certain
details of him. His report, Inclosure No. 3, is so full and clear, that it
seems unnecessary to go over the ground again. I desire to incorporate it as
part of my dispatch, fully approving it as if written so.
The rice bill passed to a second reading without objection, and the ministry
hoped to get it through at once, but on second reading Mr. Castle, a noble,
and a merchant interested in the importation of rice (see letter of Castle
and Cooke, appended to Mr. Hastings’ report), who had not been “posted”,
arose and asked questions, and finally moved and carried a select committee
of reference, where the bill still lies.
* * * * * * *
The English vice-consul, Mr. Davies, also came to see me, a merchant, largely
interested. It was his ship that brought in over 100,000 pounds of East
Indian rice, on July 4.* * * I told Mr. Davies that taxation is an incident
of sovereignty, and if the British could dictate how much tariff the
Hawaiian Government should put upon rice, or any other article not specified
in some treaty already made, then Great Britain was the real sovereign of
these islands, and the Hawaiian Kingdom was not an independent
sovereignty.
He wanted to know whether the United States would not be satisfied
[Page 608]
with a strict system of Hawaiian
excise, like the barley malt excise of Great Britain, which would insure
that none of the foreign rice should be exported to the United States.
* * * * * * *
I have no means of forming any conjecture as to what may be accomplished to
prevent so large an importation of foreign rice; but I am convinced beyond
doubt that none of it ever can or will be exported to the United States as
Hawaiian rice.
I have, &c.,
[Inclosure 1 in No. 120.]
Mr. Comly to Mr.
Kapena.
Legation of the United States,
Honolulu, July 17,
1880.
Sir: I have the honor to inform your excellency
that I am in receipt of further instructions from the State Department,
under date of May 25, in regard to suspected evasions of customs duties
on rice, fraudulently shipped as the growth and produce of the Hawaiian
Islands.
The large importations of foreign rice for the use of the Hawaiian
Islands, while your own rice is still more largely exported free of duty
to the United States, is looked upon by the Treasury officials as a
constant menace to the faithful observance of the treaty
stipulations.
I make no suggestions in the premises, trusting that His Majesty’s
Government will constantly aid in preventing frauds on the United States
revenue, and, if possible, take measures to remove even causes for first
apprehension, so far as may be.
Renewing the assurances of my high consideration and respect,
I am, &c.,
[Inclosure 2 in No. 120.]
Mr. Kapena to Mr.
Comly.
Department of Foreign Affairs,
Honolulu, July 19,
1880.
Sir: I have the honor to acknowledge the
receipt of your dispatch No. 175, dated 17th instant, informing therein
“that you are in receipt of further instructions from the State
Department, under date of May 25, in regard to suspected evasions of
customs duties on rice, fraudulently shipped as the growth and produce
of the Hawaiian Islands.”
At the earliest opportunity I will lay your said dispatch before my
colleagues, with the view of taking such measures in the premises “to
remove even causes of apprehension,” as alluded to in your (now
acknowledged) communication. An early reply will be sent to you.
Renewing the assurances of my highest respect and distinguished
consideration,
I have, &c.,
[Inclosure 3 in No. 120.]
Mr. Hastings to Mr.
Comly.
United
States Consulate,
Honolulu, July 21,
1880.
Sir: With reference to the subject of dispatch
No. 61, and inclosure, addressed to you by the honorable Secretary of
State, referred to me on the 17th instant, in compliance with the
request made at the time, I have the honor, most respectfully, to submit
the following in regard to the importation of foreign rice into the
ports of this
[Page 609]
kingdom, and of
the practicability of its exportation hence as the product of these
islands, thereby defrauding, the United States revenue.
This subject has been almost constantly before this office during the
past three years. Attention was first called to it by Special Agent J.
F. Evans, of the Treasury Department, under date of September 1, 1877.
Mr. Evans then submitted a series of interrogatories in regard to the
importation and exportation of sugar and rice at this port, for the use
of a commission appointed by the President to investigate the customs
service at the port of San Francisco, which commission, he reported, was
also charged to make inquiries relative to the operation of the treaty
of reciprocity between the United States and Hawaiian Islands.
The questions were replied to by Dr. Scott, then consul, aud as a number
of them relate to the subject of the letter of the honorable Secretary
of the Treasury (accompanying your No. 61), I append extracts herewith
and copies of accompanying letters, marked Appendix A.
The subject was again brought to the attention of this office by a
communication from your excellency dated May 28, 1879, which was replied
to on the 30th of the same month, to which reply I would most
respectfully beg to refer.*
The practice of issuiug invoice certificates at this office is the same
as described by Consul Scott in the reply to query IX in the
accompanying appendix (A).
It is true that “there seems to be room for fraud in the importation of
rice from other countries (to the United States) via the Hawaiian
Islands, and entered as the growth, &c., of those islands,” but the
reasons that may be given why, in the opinion of this office, it is not
done or that no attempts have been known to have been made in that
direction may be stated as follows:
- 1st.
- The well-known difference existing between Hawaiian and other
rice in size, shape, &c., make detection almost certain at
any port of entry in the United States.
- 2d.
- Those interested here in the cultivation, cleaning, and
shipping of rice, knowing that the commission of such frauds
under the treaty might be a strong argument in favor of its
abrogation, and, consequently, the i emission of duties of
Hawaiian rice at the ports of the United States would cease, are
continually on the alert to observe that such a scheme is not
attempted.
- 3d.
- It will not pay. Chinese and other rice can be bought in San
Francisco or any other United States port cheaper than they can
be brought here, landed, and re-exported thence. Presuming that
a scheme could be carried into effect whereby such rices as are
imported here could be re exported as No. 1, Hawaiian (the only
kind exported), buyers in San Francisco or elsewhere would
hardly be supposed to pay 6 or 6½ cents a pound for a rice they
know can be purchased there for 3½ cents. To make such a scheme
profitable it would not only be necessary to make the United
States officials at this port and the port of entry believe the
article to be Hawaiian product, but also the purchaser.
Considering the difference existing between the foreign and the
island product, this would be no easy matter.
On several occasions when large quantities of rice have been landed here,
I have been well informed as to its whereabouts and intended
destination, not only by personal observation, but through the Hawaiian
customs officials here.
The importation of rice here since the treaty went into operation
(September, 1876) has largely increased, as the following table will
show:
| Years. |
Duty
paid. |
Value. |
Bonded. |
Value. |
|
Pounds. |
|
Pounds. |
|
| 1875 |
400 |
$8 00 |
|
|
| 1876 |
21,713 |
494 00 |
20,000 |
$480
00 |
| 1877 |
928,806 |
24,874
00 |
|
|
| 1878 |
541,075 |
15,823
11 |
|
|
| 1879 |
761,481 |
22,394 57 |
265,532 |
4,806
00 |
| Totals |
2,253,475 |
63,593 68 |
285,532 |
5,286
00 |
[Page 610]
The imports of rice for the first six months of the present year are as
follows:
| Whence imported. |
Pounds. |
Value. |
| duty
paid. |
|
|
| Japanese |
69,147 |
$1,566 76 |
| British colonies |
4,210 |
127 70 |
| Chinese |
640,239 |
16,840 02 |
| Siam |
20,000 |
500 00 |
| bonded |
|
|
| Chinese |
203,262 |
5,562
29 |
| Total |
936,858 |
24,596
77 |
The arrival of the British ship City of Madrid on the 4th instant, with
100,000 pounds of rice from British Burmah, Aia Liverpool, swells the
numher of pounds of foreign rice imported thus far during the present
year to 1,086,85b pounds. Judging from these figures the importations of
foreign rice for the year 1880 will he more than double those of any
preceding year since 1875. It will, therefore, he seen that the
merchants here have been, and are still, importing yearly large
quantities of foreign rice, not for re-exportation as
island product, however, as has heen suspected, for it is far
more profitahle to import it for consumption and
export the home product. The former could hardly he done
without detection either here or at the port of entry in the United
States, while the latter is a safe business. Chinese, Japanese, and East
India rice can he imported here direct, or via San Francisco, and sold
at a profit to the planters and other consumers for 4½ cents per pound,
while the Hawaiian, No. 1, sells for 5 to 6 cents per pound here.
The total yearly production of rice on these islands is not given, as it
is difficult to calculate on the amount consumed yearly.
The exportation of this staple for the year 1879 amounted to 4,792,813
pounds, nearly all of which was sent to San Francisco. Of paddy, only
38,815 pounds were exported, all of which went to the same port.
The consumption of rice on the islands is variously estimated. From the
numher of Chinese among the population it would seem that 8,000,000
pounds for 1879 would he a fair estimate. This would he 3,168,372 pounds
in excess of the total amount of rice and paddy exported.
The importation for 1879, duty paid and bonded, amounted to 1,027,013
pounds. According to these figures the total production of rice on the
islands for 1879 may be estimated at 11,804,615 pounds, such amount
being obtained as follows:
|
Pounds. |
| Estimated amount of home consumption |
8,000,000 |
| Deduct importation of foreign rice |
1,027,013 |
|
6,972,987 |
| Amount of rice and paddy exported |
4,831,628 |
| Estimated total product |
11,804,615 |
It was estimated that the acreage of rice lands under cultivation in 1879
would yield a crop for that year of about 5,900 tons (11,800,000
pounds). It would therefore appear that the foregoing estimate is not
far from correct.
The crop for 1880 will not show a marked increase over this amount, but
for 1881, judging from leases lately made of rice lands on this island
(Oahu) and Kanai, the product for that year may reach 6,500 tons. It is
quite probable, however, that the exportation of rice from these islands
will increase in proportion to the amount of
foreign rice imported, as it has been shown that the latter takes the place of the home product as
an article for consumption.
I have, &c.,
FRANK P. HASTINGS,
United States
Vice-Consul.
[Page 611]
[Inclosure in Mr. Hastings’ dispatch to Mr
Comly.]
APPENDIX A.
Extracts from answers to interrogatories,
propounded by J. T. Evans, special agent Treasury Department, to
Jas. Scott, United States consul, Honolulu.
[Vide Consul Scott’s letter of
September 25, 1877.]
Query II. Is it possible under the existing usages of trade for rice and
sugar imported from this country to the islands to be re-exported hither
as the products of the islands?
Answer. I think it highly improbable under the existing usages of trade
that rice or sugar could be imported from the United States or other
countries to these islands, and be re-exported to the United States as
the productof the islands, without detection.
As I am advised not only by the presentation of landing certificates for
all goods landed from the United States in bond, but by the publications
in our papers of the manifests of cargoes landed here from all
countries, I am satisfied that sugars and rice could not be imported
under the usages of trade here without my cognizance. All importations
to these islands, except occasionally a cargo of lumber and coal at
Lahaa-na and Hilo, are entered at this port. I have been careful since
the ratification of the treaty to watch the importation and disposition
of goods included in the schedule of Article II of the treaty.
I have every reason to believe that the China, Japan, and India rice,
named in my answer to interrogatory No. 1, has been or is being consumed
on the islands.
The Japan, India, and China rice imported here differs in size, shape,
and color from the Hawaiian rice, and can easily be distinguished by a
partially practiced eye. Should it ever be exported to the United States
in Hawaiian packages, it could hardly fail detection at the port of
entry.
As there is but a fraction of a cent difference between the cost of the
Japan and India rice per pound when landed here, and second class
Hawaiian rice, which is better than the imported, it would not more than
pay to reship it to the United States, leaving out of the question the
great risk of detection.
I addressed notes, when I received your interrogatories, to Messrs. C.
Brewer & Co., Castle & Cooke, and H. Hackfeld & Co., all
highly respectable merchants of this city, and the principal importers
of the rice named. I inclose herewith copies of the notes and answers
marked Nos. 1, 2, 3, and 4.
Query IX. What is your practice in issuing export certificates to the
United States, and upon what information are they granted?
Answer. My practice of issuing export or invoice certificates of goods
exported to the United States is as follows:
I require the shipper, producer, manufacturer, or owner, or their agents,
to produce their invoices at this office in person, and make declaration
over their signatures to their correctness. If I have any doubt about
the correctness of the declaration I put them on their oath, or satisfy
myself by inquiry or investigation as to their correctness, then adding
my certificate.
This is my practice in case of invoices not covering goods included in
the reciprocity treaty. I require the shipper, producer, manufacturer,
or owner, or their agents, in addition to the foregoing, to take and
subscribe, in triplicate, the oath herewith inclosed, marked No. 5,
which are attached to the triplicate invoices. Of course if I suspect
fraud in any case I notify the Treasury Department and collector of
customs of the port at which the goods are intended to be entered.
[Inclosure 1 accompanying Appendix
A.]
Circular letter of Mr. Consul Scott to several Hawaiian
mercantile houses.
Consulate of the United States,
Honolulu, Hawaiian Islands, September 29, 1877.
Gentlemen: Your house has been importing a
considerable amount of foreign rice.
Will it be asking you too much to state to me why foreign rice is
imported into this kingdom, while a large quantity of rice is raised in
and exported from the kingdom.
I am, gentlemen, &c.,
J. SCOTT,
United States
Consul.
[Page 612]
[Inclosure 2 accompanying Appendix
A.]
Messrs. Brewer & Co.
to Mr. Scott
Honolulu, September 29,
1877.
Dear Sir: We have to acknowledge the receipt of
your letter of this date inquiring of us “why foreign rice is imported
into this kingdom, while a large quantity of rice is raised in and
exported from this kingdom.”
In reply to the same, we would state that the reason is simply because we
can import and sell here, so as to leave a margin, by selling at the
same rate as the same quality of Hawaiian rice is sold for, and is
preferred by Chinamen on the plantations who consume it.
As it may be of interest to you, we give below the cost of 50 tons Japan
rice (equal to second-quality Hawaiian grown) lately imported by us:
Cost of 100,000 pounds Japan rice bought in bond in San Francisco, including
charges.
| Carting and commissions for purchasing |
$3,317 41 |
| Freight at $5 per ton & priming $262.50; wharfage,
$12.50 |
275 00 |
| Carting to store, $25; debenture certificate, $5 |
30 00 |
| Import duties 10 per cent., $331.74; custom-house stamp,
$2.50 |
334 24 |
| Total cost laid down |
3,956 65 |
By this you will observe the cost of the rice is to us about 4 cents per
pound, which is less than we can purchase second-quality Hawaiian rice
for, that being sold here , for 4⅛ cents to 4½ cents.
This rice we sell here to our sugar plantations at 4¼ cents per pound,
thus making a fair profit besides making freight for our vessels, and if
we sell at 4 cents we should be satisfied with earning our freight.
We are of the opinion that the Hawaiian rice-growers prefer to polish
their rice for table use, as it pays better and it is not liked as well
by the Chinamen, who consume most of the imported rice.
We remain, &c.,
C. BREWER & CO.
[Inclosure 3 accompanying Appendix
A.]
Messrs. Castle &
Cooke to Mr. Scott.
Honolulu, Hawaiian Islands,
October 1, 1877.
Dear Sir: Your favor of the 29th ultimo, asking
for information in regard to our importation of foreign rice, is at hand
and noticed in full. In reply we would say, our attention was called
last November to the low price of Japan rice in bond in San Francisco by
commercial papers of that city, and having a vessel up for this port
from there, directed a shipment of 200 mats, if to be had, at the
quotation 3 cents per pound. This rice was shipped at the time and
landed at Honolulu at a cost of 3¾ cents per pound, duty paid. Hawaiian
rice was selling then at 4½ cents per pound. We were thus able to sell
at a less price than we could buy Hawaiian, besides securing freight for
our vessel from San Francisco.
We have imported of this Japan rice thus far 1,400 mats (35 tons), the
bulk of which has been sold for consumption on the various plantations
of these islands, and the balance in small quantities (say one to ten
mats) for consumption in Honolulu by servants and families.
If considered necessary we can show schooner receipts of delivery of the
above rice to the various plantations sold to.
You will observe, therefore, that we import Japan rice because we can
sell it here to the plantations cheaper than Hawaiian, making thereby
not only a profit to ourselves, but also secure so much additional
freight for our vessel from San Francisco. Should Japan rice advance ½
cent per pound in San Francisco, or Hawaiian rice fall here ½ cent per
pound, we should not import the rice.
Trusting that the above will meet your requirements,
We remain, &c.,
CASTLE & COOKE.
[Page 613]
[Inclosure 4, accompanying Appendix
A.]
Messrs. H. Hackfeld &
Co. to Mr. Scott.
Honolulu, October 2,
1877.
Sir: We have the honor to acknowledge the
receipt of your letter of this date, stating that onr “house has been
importing a considerable amount of foreign rice,” and asking us to state
to you “why foreign rice is imported into this kingdom while a large
quantity of rice is raised in and exported from the kingdom.”
In reply we beg to say that the reason why foreign rice is imported here,
is that it can be laid down cheaper here for home consumption than the
Hawaiian product, owing partly to the inferior quality of the foreign
rice thus imported, and partly, and we may say principally, to the fact
that Hawaiian rice is admitted duty free to the United States under the
treaty of commercial reciprocity, and hence commands an increased value
in this market.
H. HACKFELD & CO.
