No. 731.
Mr. Hubbard to Mr. Bayard.

No. 394]

Sir: I beg to respectfully call your attention and careful reading of the inclosed leading editorial which I have taken from the August number, 1887, of The Australasian and South American, a representative commercial journal and of marked influence in diplomatic and consular circles (and “devoted to the extension of commerce between the United States and Canada and Australasia, South Africa, South America and India, China and Japan, etc.”), under the head of “Our trade with China and Japan.” While the present status of that trade is in the main correctly stated, yet it is due to truth and candor to say that the writer of the article misleads, unintentionally, no doubt, as to matters of fact, when speaking of our volume of trade with these countries that—

We are unmeasurably distanced alike by Germany and Great Britain, both of which countries look upon China and Japan as the most important fields for the development of their vast foreign commerce.

The statistics of the customs annual return for 1886 show, to use round numbers, that the aggregate export and import trade between the United States and Japan was over twenty-three millions of yen as against twenty-one millions between Great Britain and her colonies and Japan, and three millions between Germany and Japan, facts which I had the honor in my dispatch No. 346 to the Department of State to present fully by figures and tables in connection with a review of the annual trade of Japan with all countries for 1886.

It is true Great Britain’s exports to Japan are largely in excess of the exports from the United States to this country, but the gratifying fact was made manifest in the trade returns for 1886 that the American export trade had increased during that year over 1885 nearly a million dollars in value. As to Germany, the entire sum total of her exports and imports is less than four millions, nearly twenty millions less than that of the United States with Japan. As to the other obstacles and disadvantages to our more enlarged commercial progress in this country, mentioned by the writer of the article inclosed, they are stated with force and fact, and deserve to be earnestly studied and heeded by our countrymen who propose extending our trade in the East with steady steps against all competitors. The hopeful horoscope cast by the same intelligent writer for the future of our trade relations in Japan and China, is not without sound support in reason.

I have, etc.,

Richard B. Hubbard.
[Page 1060]
[Inclosure in No. 394.]

our trade with china and japan.

The past few years have witnessed a very material increase in our trade with China and Japan, and present indications would appear to promise that within a reasonable time our commerce with both countries may attain something near the value it ought to possess. The most important feature of the increased trade returns, however, is to be found in the character of our exports to these markets, their variety having been extended in a manner that is particularly gratifying as affording the best proof of the growing extent to which the people of China and Japan are becoming familiar with our productions.

After all, however, when we come to compare the volume of our business with the value of the trade other nations enjoy with China and Japan, we have but little cause for satisfaction. We are unmeasurably distanced alike by Germany and Great Britain, both of which countries look upon China and Japan as among the most important fields for the development of their vast foreign commerce. There are two principal causes for the backward state of our trade with China and Japan, and we may profitably devote a little space to their consideration.

In the first place, we find the same obstacle to our commercial progress in these countries that we have so often called attention to in speaking of our trade with other markets, viz, far too little attention is bestowed on the introduction of our goods, which are almost expected to sell themselves. In nearly any part of the world, except in China and Japan, we might look for business growing out of the opportunities offered buyers by means of trade, literature, advertising, etc. There is little to be done in either of the above countries through such factors. Chinese and Japanese merchants are notoriously keen buyers; they not only want to know the lowest prices and discounts obtainable on any line of goods, the best terms of credit, etc., obtainable, but in nine cases out of ten they want to satisfy themselves, by personal inspection, of the character of the articles they are purchasing. This is only natural. Their customers, for the most part, cherish deep-rooted preferences for certain forms, patterns, and styles in goods of their own or foreign manufacture, and they will not tolerate any deviation from the often arbitrary standard they have established. It is only the native buyer who thoroughly understands what is needed for the market he supplies, and his orders, as received” by the resident representative of the foreign manufacturer or merchant, must be minutely observed. Comparatively few American houses have taken the trouble to establish direct commercial relations with China or Japan through firms located in these countries, and the consequence is that their facilities for meeting the requirements of the market are inadequately realized, even by those who would willingly patronize American productions. England, Germany, and France are represented at the principal ports of entry by numerous mercantile houses and secure in consequence the bulk of a profitable and rapidly increasing trade.

The second disadvantage under which we labor in the development of our trade with both China and Japan is the lack of active support our merchants receive from the agents of our Government in these countries. England and Germany have made it their business to adopt every possible means to secure the personal favor and good’ will of Chinese and Japanese officials, and their rivalry in this direction leads them to discredit the efforts of other nations to obtain a footing in these markets. Agents of these Governments resort to every practice in their power, honest and otherwise, to decry competing influences and competition, even to the extent of belittling the business methods and progressive tendencies of the Chinese and Japanese merchants, and the various journals they control render them valuable assistance in this course. The effect of their action on the foreign commercial and diplomatic relations of both countries is in a high degree detrimental to their advancement, and is plainly proven by the extraordinary favors shown to this or the other nation, according to the influence its representatives are able to exercise in official circles. As an instance, we may refer to the large orders the Japanese Government has recently placed for steel rails in Europe. Half the contract has gone to English firms at £4 11s.; the other half has been taken by Germans, not at £4 11s., but at £5 6s. The rails are to be delivered free on board in London and Antwerp respectively. The difference of 15s. per ton represents in this case, says a writer in Iron, a free gift of about £10,000, presented by the Japanese Government to the German manufacturers. Of the motives for this gift, whether gratitude for favors past or to come, the English journal naturally knows nothing, but remarks: “British manufacturers can not be blamed for failing to secure business, in the face of favoritism.” It adds, somewhat ill-naturedly: “A conviction is fast spreading abroad that the Japanese Government and people are so fickle in their friendship and so unreliable in their commercial dealings that they are not worth taking the trouble to please.”

It is gratifying to American independence to know that what trade we enjoy with China and Japan has been built up entirely on the merits of our productions, and is [Page 1061] not likely to be jeopardized by misrepresentations or such special pleadings as government agents are able to offer. In Japan, especially, the course adopted by our minister has created an excellent feeling in our favor in commercial circles, the most influential papers commenting frequently on the desirability of closer mercantile relations between Japan and the United States. In China much the same feeling prevails, except that the effect of our restrictive legislation against Chinese immigration and the bad treatment Chinese subjects have received in some parts of the country still weigh against us. That these adverse influences, provided their cause is not renewed, will ultimately disappear there is little room to doubt, and, with the progressive tendencies both China and Japan are at present exhibiting, American commercial enterprise, exerted in the right direction, is certain to develop the many and profitable opportunities for trade that these important markets afford.