Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 3, 1906, (In two parts), Part I
Minister Rockhill to the Secretary of State.
Peking, July 18, 1906.
Sir: I have the honor to transmit herewith for your information copies of correspondence between the president of the American [Page 209] China Association, of Shanghai, and this legation concerning the protection of American commercial interests in Manchuria.
Similar communications, based on the same report, have been addressed to the dean of the diplomatic body by the Shanghai General Chamber of Commerce, and to the British and German chargé d’affaires by the China Association, of Shanghai, and the German Chamber of Commerce of Shanghai.
I have reason to think that the answers which will be or have been made to these complaints are substantially in accordance with my reply to Doctor Reid, which I trust will meet with your aproval.
The Japanese view of the complaints of the Shanghai people is very well set forth in the inclosed editorials from recent issues of the Yokohama Japan Daily Mail.
I have sent copies of Doctor Reid’s letter, with its inclosures, and also my reply to the same, to our ambassador at Tokyo for his information.
I have, etc.,
Mr. Rodgers to Mr. Rockhill.
Sir: I have the honor to forward herewith by request of the American Association of China certain documents relating to the Manchurian commercial situation. I can only add that the representations of the American Association in regard to this matter are, as they apply to American interests in Shanghai, based entirely upon facts.
The best evidence of the stagnation of northern trade from which Shanghai is suffering is to be seen by the idle shipping in the harbor. Upon a recent inspection I was able to count over two dozen northern cargo ships which are now tied up. The strain upon the financial resources is growing tense and there will undoubtedly be many failures among the Chinese having large stocks of American and English cotton goods on hand unless there is speedy relief.
I do not pretend to state that all of this is due to the conditions in southern Manchuria, brought about by Chinese occupation, but there is unquestionably warrant for some features of the protest. I insist, however, that a goodly part of the present evil is attributable to the reaction which naturally follows a period of such strenuous trade as that induced by the war.
The American Association of China to Mr. Rockhill.
Sir: I herewith submit for your consideration and action a report, which has been prepared by three of our merchants in respect to the protection of American commercial interests in the three provinces of Manchuria. The president of the China Association and the president of the German Association, besides reference to Peking, have also made representations to their home governments. We, on our part, solicit your immediate aid in first ascertaining whether the Chinese Government will give assurances that no preference shall be given to the commerce of any one nation in any part of Manchuria. Such assurances would give confidence to our business men, whose trade has been for some time, so far as Manchuria is concerned, in a state of stagnation.
[Page 210]Should China excuse herself, on the ground of inability, we beg you, in our behalf, to urge on our Secretary of State at Washington the importance of making representations to the Japanese and Russian Governments for the maintenance of Manchuria of equal opportunity for the commerce of all nations. The report herewith presented refers more especially to obstruction placed to our trade by the Japanese, but this is because most of American goods going into Manchuria from Shanghai will pass through territory occupied by the Japanese, and also because the competition with American goods on the part of Russia is less than that from Japan. The principle, however, is as true with the one nation as with the other. We base our right of protest on Article IV of the Portsmouth convention, which stipulates that “Japan and Russia reciprocally engage not to obstruct any general measures common to all countries which China may take for the development of the commerce and industry of Manchuria.”
It is probably true that all three Governments will have to be officially approached. In doing this our own Government is favorably situated for making strong representations, having interposed in time of war between Russia and Japan for the restoration of peace.
We beg to emphasize that prompt action is necessary. With every month of delay the disadvantage is to non-Japanese goods, while the advantage is all accruing to Japan. I therefore most respectfully urge upon your attention the facts contained in the inclosed report and the specific requests which are summarized at the close.
With expressions of esteem from the members of the executive committee,
President of American Association of China.
Messrs. Seaman, Rudy, and Thomas to Doctor Reid.
Sir: The undersigned, appointed at a meeting of the committee on the 6th instant as a subcommittee to solicit from the party of gentlemen which recently made a trip in southern Manchuria such information as they were willing to communicate bearing on trade conditions in that quarter, respectfully report as follows:
On the 11th instant we, on intimating our desire for the purpose referred to, were invited to attend a meeting which had been arranged with the United States consul-general and at which were present Mr. C. W. Wrightson, Mr. L. Mid wood, Mr. de Gray, and Mr. J. R. Patterson, who had returned from their trip a few days previously. After explaining in a general way the object of their journey, which was primarily to ascertain the conditions affecting the import trade of Manchuria, as at present existing, Mr. Wrightson read a paper which had been prepared for publication, and which was published in the North China Daily News the next day, the 12th instant, and which embodied the results of their investigations. We attach a copy of the said paper and make it the basis of this report.
In addition to the information thus conveyed, and in reply to various questions asked, nothing of material importance was elicited. It appeared that at Newchwang, through which port practically all the foreign trade of southern Manchuria has hitherto passed, orderly conditions prevailed under Japanese jurisdiction, and, although the Japanese flag flew over the custom-house, it does not follow that any interference existed on the part of the Japanese authorities administering the foreign settlement with the ordinary customs administration under the Chinese system. It was understood, however, that a part of the revenues from the “native customs” was impounded by the Japanese and applied to the sanitary and general improvement of the settlement. No interference on the part of the Japanese with the ordinary course of trade was discovered, and adequate facilities, which had previously been commanded for military purposes, now exist for the transport of goods by cart and boat on the Liao River. The import trade was, however, in a very depressed condition, as, although the stocks were not large, no demand existed from the interior.
[Page 211]It is also asserted, but of this we have no proof, that a heavy likin is now exacted on goods going to the interior from Newchwang, an impost that has not been made in the past, and from which Japanese traders passing their goods through by rail are exempt.
Proceeding north by rail the party continued their investigations at important points, as described in their report, until they finally reached Hsin-mun-tun, whence they returned by rail to Shanhaikwan and Peking.
The party was permitted, in this first instance, to proceed beyond Newchwang only after soliciting and obtaining passports from the Japanese Government at Tokyo, and throughout their trip they were virtually the guests of the Japanese authorities, who, however, afforded them every facility for pursuing their investigations.
From the tenor of their report it would appear that the chief explanation of the present slack trade lies in the unsettled condition in which large sections of the country, the scene of the recent hostilities, still remain, but the people are not neglecting such means as they possess toward reestablishing themselves, rebuilding their houses, and cultivating their crops.
Several important factors, however, adverse to general import trade remain to be referred to. It is alleged that the Japanese are importing their own fabrics and merchandise freely into Manchuria by way of Dalny (now renamed by them Tairen) and the Chinese Eastern Railway, paying neither duty nor likin thereon to the Chinese authorities, and that this facility is granted only to Japanese subjects. This practice is obviously in open violation of the existing treaties between China and all the other treaty powers, and is properly a subject calling for diplomatic protest on the part of our minister at Peking. It is, we further venture to remark, in contravention of the stipulations of the treaty of peace between Russia and Japan.
Bearing on this point, evidence has been submitted to us to the effect that a heavy impost is levied on all goods from Chinese ports entered at Port Arthur or Dalny, whether such goods are Chinese or of foreign origin. Whilst other foreign traders have been estopped from doing business in the interior towns of Manchuria, the Japanese have had free access thereto with their goods, upon which they are protected by their authorities from the payment of local tax levies to which native (Chinese) traders are subject.
As the distribution of foreign goods in the interior is conducted through native agencies, this discrimination in favor of the trade in Japanese goods, conducted by Japanese agents, creates a monopoly in their interests wherever the articles dealt in are of a competing character.
The absence of any stable medium of exchange or monetary system is also an obvious hindrance to satisfactory trade conditions. The native banking facilities became disorganized by the war, and the country was flooded by the war issues of the contending forces, which afforded the only medium of exchange. In the section occupied by the Japanese their war notes have sustained very variable exchange values and are at present convertible with notes of the Yokohama Specie Bank only, which also have local currency only at equivalent rates, and it follows that a monopoly of the exchanges of the region is created in Japanese interests.
The control and virtual administration of the country in its several sections by the forces of the late contestants continue to present serious hindrances to a satisfactory reestablishment of trade. With a view, therefore, to the relief of our trade, which, in several articles of primary importance, has become reduced to a point approaching extinction, we respectfully recommend that a representation of the prevailing conditions be addressed to the United States minister at Peking, soliciting his efforts in support of the following objects:
- 1.
- That the Chinese Government be pressed to resume the effective administration of the Manchurian provinces at the earliest possible date.
- 2.
- That an efficient Chinese customs administration be established to regulate the trade entering the country through the borders now under Japanese and Russian control, in accordance with our existing treaties.
- 3.
- That a uniform system of currency be established in substitution of the present chaotic conditions.
- 4.
- That he take such further action as in his judgment the circumstances call for.
We have, etc.,
notes of a visit to inquire into the trade conditions of manchuria.
After a most comprehensive inquiry it is most difficult, if not impossible, to offer any satisfactory evidence to substantiate the theory that the Japanese Government, through the instrumentality of either its military or civil authorities, is at present purposely interfering with or placing any obstacles in the path of other nations for the industrial exploitation of this important part of the Chinese Empire.
The absence of demand from this large, fertile, and thickly populated province, which is not only being felt in the cotton piece goods trade but in other commodities, is directly and principally attributable to the disorganized condition, both financial and commercial, of this district, a vast area of which, it must be remembered, was practically laid waste by both armies in their recent struggle. That crops were destroyed and entire villages devastated can not be questioned, and ocular demonstration of the havoc wrought during the war is still obtainable. The Chinese are, however, sustaining their reputation for rapid recuperation, the natives having returned to their usual villages or towns, and the work of rehabilitation is progressing as favorably and quickly as can be expected. Their homes are, however, still in some cases under reconstruction, and the crops, it must be noted, are still to be harvested.
That a large sum of money has been expended during the past few years by both Russians and Japanese can not be contradicted, but that a small percentage of this amount has as yet reached the merchant classes is also generally conceded. It is fair to presume that adventurers and coolie classes have been the principal beneficiaries.
It must not be forgotten that the territory of which we write was the seat of a big and disastrous war, and that less than eight months have elapsed since a treaty of peace was signed. If we mistake not, a similar condition of affairs existed subsequent to the hostilities in South Africa, when it will be recalled heavy losses were sustained by overconfident traders who overpurchased in anticipation of a demand which materialized only after long delay. The disruption of transportation facilities by the commandeering of both native junks and carts for military purposes, and the partial destruction of the railway line from Port Arthur to Mukden, are also important factors that must be recognized from a trade point of view. The recovery must necessarily be gradual, and while it is true trains are running between the points named, it is not quite reasonable to suppose that these were available until quite recently for trade purposes.
Patience must therefore be the watchword of those materially interested in this question, and it is our confident belief that a revival of trade on a much larger scale than hitherto witnessed will be the final result.
It is satisfactory to record that the stock of cotton piece goods, which article engaged our special attention, can not be considered more than normal at either the distributing point of Newchwang or in the interior consuming centers, and we submit this opinion without reservation, our inquiries regarding this feature of the situation having been exhaustive both amongst the larger dealers and smaller shopkeepers throughout the country we have traversed, including the cities of Newchwang, Lioa-yang, and Mukden.
The financial system in Manchuria is very unsatisfactory and leaves much to be desired. The circulation of war notes by the Japanese Government to the extent of about 200,000,000 yen, while increasing the wealth of the province, will naturally tend to divert trade to their own country, more especially while this issue continues at any discount from local currency. The Japanese are unquestionably taking advantage of their military occupation and the tardiness of the Chinese Government to introduce their goods throughout Manchuria, and they will be more strongly intrenched the longer this province remains under their control. The powers should therefore be urged, through the usual channels, to use their good offices in expediting the time when the Chinese will assume jurisdiction, and also in concluding arrangements whereby the important port of Dalny—through which the Japanese, in the absence of a Chinese customs station, are now bringing in their goods not only free of import duty but free of all likin charges to any point in the interior where transportation can be effected by rail—will be placed on a basis similar to the port of Tsingtau, viz, open to the trade of all nations, and a Chinese customs station established for the purpose of collecting the customary duties on the goods passing out of Dalny into [Page 213] Manchuria. The renewal or construction of the railway bridge over the Liao River in the neighborhood of Hsinmuntun, which now seriously interferes with the large junk traffic over this waterway, is a matter requiring immediate attention and seems so reasonable that we can not doubt that the Japanese Government will promptly instruct the military administration to remedy the difficulty beyond further complaint.
The opinion among the merchants of Newchwang is practically unanimous that the trade of that port is seriously affected by the disorganization of the usual railway transportation between Thieling and Kuan-chong-tsu, the latter a very important distributing center, now in the hands of the Russians, about 40 miles of the line having been torn up, but is now being relaid. The northern portion of the line is still in possession of the Russians, who are said to be charging arbitrary rates with the purpose of forcing the trade of Kuan Chong Tsu through Vladivostok.
We are reliably informed that since our departure from Newchwang the failure of a native bank involving some $400,000 has been satisfactorily adjusted, and that approximately the equivalent of 1,000,000 taels has been remitted to Shanghai by local merchants or bankers. These reports, if true, are significant and will necessarily inspire confidence.
Every facility has been afforded us by the Japanese military and civil authorities in our investigation, and our treatment has been uniformly civil and courteous.
Mr. Rockhill to the American Association.
Dear Doctor Reid: I have to acknowledge the receipt of your letter of the 2d instant, forwarded to me by the consul-general of the United States at Shanghai, together with a report on the protection of American commercial interests in Manchuria, signed by Messrs. J. F. Seaman, W. A. Rudy, and J. A. Thomas.
You request in the name of your association the immediate aid of this legation in securing from the Chinese Government assurances that no preference shall be given to the commerce of any nation in any part of Manchuria. You also call my earnest attention to four specific requests made in the report, and which are:
- 1.
- That the Chinese Government be pressed to resume the effective administration of the Manchurian provinces at the earliest possible date.
- 2.
- That an efficient Chinese customs administration be established to regulate trade entering the country through the borders now under Japanese and Russian control, in accordance with our existing treaties.
- 3.
- That a uniform system of currency be established in substitution of the present chaotic conditions.
- 4.
- That he (I) take such further action as in his (my) judgment the circumstances call for.
As regards the request made in your letter, I would say that I am not aware that the Chinese Government has granted or purposes to grant or has shown any disposition to grant preferential treatment to the commerce of any nation in Manchuria. The present conditions, not only as regards trade, but the general administration of that part of the Chinese Empire, can not be directly charged to China; they are, as pointed out in the letter of Messrs. Seaman, Rudy, and Thomas, results of the recent Russo-Japanese war. The dislocation of trade and of Chinese administration are certainly as prejudicial to China’s interests as to ours. It can not be conceived that China should not take the necessary steps to remedy this unsatisfactory state of affairs as soon as she is in a position to do so, but, as you are aware, the withdrawal of the Japanese and Russian forces from Manchuria is being carried out under treaties concluded between Japan and Russia, and the resumption of Chinese effective control over Manchuria proceeds pari passu, and it is also regulated by the treaty of December 22, 1905, between China and Japan. Until the evacuation has been completed it logically follows that Chinese administration can not be absolute.
As regards the specific requests contained in the report of Messrs. Seaman, Rudy, and Thomas, the above considerations must be my answer to their request No. 1.
[Page 214]As to request No. 2, “That an efficient Chinese customs administration be established to regulate the trade entering the country through the borders now under Japanese and Russian control, in accordance with our existing treaties,” I would say that this matter has been under discussion between this legation and the Chinese foreign office for some months past, and that orders have now been given for the immediate opening of a custom-house of the imperial maritime customs service at Antung Hsien, on the Yalu River.
I am also officially informed by the Chinese foreign office that it hopes to take up within the next few days the discussion of the question of establishing a custom-house near Dalny, and that it trusts it may be able to establish similar customs facilities in the north for trade coming from Russian, although it contends, in this agreeing with your own conclusions, that there is very little fear of competition with American trade in Manchuria from that quarter.
The subject of the establishment of a uniform system of currency (in Manchuria presumably), which is request No. 4, is one, the Wai-wu Pu informs me, that has been and still is receiving its most earnest consideration, and has been the subject of much discussion. It entertains the hope that a solution of this question may shortly be reached, as the “present chaotic conditions” are highly prejudicial to the interests of its people in Manchuria. I may say that I have it on very good authority that the “war notes” are being rapidly withdrawn, and that there are probably not 40,000,000 yen outstanding at the present time.
With the establishment of customs facilities at Antung and near Dalny within a very short space of time the discrimination against Newchwang, the port of entry of American goods in Manchuria, and of which your association complains, will at all events be removed.
The association may rest assured that our Government will continue to urge the prompt adoption by China of every measure which it seems possible for it to take to insure perfect equality of treatment of our commerce in Manchuria.
I note with interest that the gentlemen who visited southern Manchuria are of opinion that the slack trade in that country is “directly and principally attributable to the disorganized condition, both financial and commercial, of this district,” and that “patience must be the watchword of those materially interested in this question, and it is our confident belief that a revival of trade on a much larger scale than has hitherto been witnessed will be the final result.”
These conclusions, in the latter of which I can most heartily concur, and the effective steps the Chinese Government is now taking, as stated above, should help relieve any apprehension of a continuance of the causes of complaint as specified in your communication and its inclosures.
I have sent a copy of your letter and its inclosures, together with a copy of the present reply, to the Secretary of State at Washington, and to the American ambassador at Tokyo for his information.
Trusting that the above statement may prove satisfactory to the association,
I remain, etc.,