CHESHIRE, Vice-Consul-General, in charge to Russell Young, September 23, 1882

Mr. Cheshire to Mr. Young.

Sir: Referring to my dispatch of September 12, in regard to the opposition made by the Shanghai Cotton Mill Company to the Cotton Yarn Company, established by Mr. Wetmore, I think it well to lay before your excellency certain facts which you may think of enough importance to bring them before the Tsung-li yamên, as I am led to understand they have been kept secret, and as much as possible from the knowledge of the high officials.

Li Hung Chang, some five years ago, granted a concession to a Chinese official, a taotai by rank, named Peng-chi-chih, to start a cotton-mill company, giving him the exclusive privilege of manufacturing cotton cloth at Shanghai, so far as Chinese were concerned.

Nothing was done except to waste money on land and erecting the foundation walls of the proposed factory, when the company came to grief, and Peng became involved in financial difficulties.

About two years ago the present cotton mill (which is opposed to Mr. Wetmore’s company) was established, * * * Mr. Cheng-tao-chai being the principal man. Peng transferred his grant or concession to the new company, but whether it was done with the consent of Li Hung Chang I am unable to say. I may say, however, that the land and foundation walls erected by the first company were sold to Cheng-tao-chai about a year ago for 60,000 taels, and the property put in the name of an American (Mr. R. M. Brown), and registered in the land office of this consulate-general. After the transfer had been made Mr. Brown * * * endeavored to dispose of it by lottery. A few tickets were sold, but as the Chinese authorities here are opposed to lotteries of all kinds, the taotai, on learning that the property of the cotton-mill company was to be disposed of in that way, addressed a letter to Mr. Consul-General Denny, requesting him to instruct Mr. Brown to close the lottery, which was done.

I do not think his excellency Li Hung Chang is aware of this fact, and in view of the position which the present cotton-mill company have assumed, your excellency may think it advisable to bring this matter to his notice.

I understand that the cotton-mill company have only one-third of the capital subscribed; that the Chinese have no confidence in it, and are strongly opposed to the action taken by the manager against Mr. Wetmore’s yarn company; that the promoters have taken no active management beyond sending a man (Mr. Danforth, an American) home to try to get machinery; that they have bought no land for a site, nor taken any active steps to carry out the object of the association.

I am, &c.,