CHESHIRE, Vice-Consul, in charge to Russell Young, September 12, 1882

Mr. Cheshire to Mr. Young.

Sir: I have the honor to bring to the notice of jour excellency a question of some importance, and one which I think can only be satisfactorily determined at Peking. The question to which I allude is the formation by foreigners of public companies for the manufacture of articles from native products.

Mr. W. S. Wetmore, an American, and head of the firm of Frazar & Co., and Mr. T. V. Grant, some time ago started a company for the manufacture of cotton yarn; shares were allotted and deposits made to the extent of about 100,000 taels. Everything appeared to be going well, when there appeared a notice in the Shen Pao to the effect that as the Shanghai Cotton Mill Company had obtained a monopoly for the period of ten years from the northern superintendent of foreign trade, the Shanghai intendant had been instructed to investigate and prohibit the formation of a cotton yarn company, which it was alleged had been started by Chinese under the name of some foreigner, &c.

This notice seemed to have caused the circulation of many rumors among the Chinese, some of whom were shareholders in the company started by Mr. Wetmore.

Mr. Wetmore, therefore, addressed a communication to me (see letter dated September 8, inclosed herein), requesting my official assistance, with a view to ascertaining whether any special monopoly had been granted to a native company, which had been started for the sole manufacture of cotton goods, while his was for the manufacture of cotton yarn; and, if so, by whom issued, &c. I called on the taotai, with whom I discussed the matter, and learned from him that a grant or permission had been issued by the northern superintendent of trade to the Shanghai Cotton Mill Company, which is in course of formation.

I informed the taotai that I did not think that the company Mr. Wetmore had started could in any way interfere with the Cotton Mill Company, for the reason that one Was for the manufacture of cloth and the other yarn; and as the yarn company had been started by an American and another foreigner, and as there were no regulations that I was aware of in force prohibiting the establishment of such a company by foreigners, I failed to see how an instruction like the one referred to could affect it, even though there were Chinese shareholders interested in it. I pointed out the fact that there were silk filatures which had been established in Shanghai by foreigners in which Chinese held shares, and that a tannery company had been started in the same way; and in view of these precedents Mr. Wetmore was perfectly in stifled in floating his company, which was for the manufacture of cotton yarn, an industry which, if developed, would conduce largely to the prosperity of the country; and the fact that there were Chinese shareholders in it was proof that they took an interest in the undertaking. I also explained that the notice referred to the company as having been started by Chinese and put under a foreign name, which was not the case; that Mr. Wetmore had established it, and Chinese had invested in shares the same as in other companies.

With a view of obtaining the text of the concession to the Shanghai Cotton Mill Company, and to have an official record of the same, I addressed a note to the taotai on the 10th instant, referring to the notice which appeared in the Shen Pao, and requested him to send me a copy of the communication received from the northern superintendent of trade. I have just received a reply inclosing the document, a copy of which I beg to inclose.

I had a further conversation with the taotai last Saturday, when he informed me that so far as the Chinese shareholders in Mr. Wetmore’s company were concerned, he would be obliged to carry out the instructions of the minister superintendent of northern trade, and that he had issued prohibitory notices to three of them-through the mixed court magistrate. I inclose copy of a letter which I addressed to the taotai to-day, and also copies of two other communications which I received from: Mr. Wetmore upon the subject, one dated the 9th and the other the 12th of September, which fully explain the case.

You will observe in his last letter that, if possible, Mr. Wetmore would like to secure a special grant from the Chinese Government to work the yarn company.

It seems to me that Mr. Wetmore’s case is a good one. If a monopoly had been granted by the Chinese Government to the Cotton Mill Company, to the exclusion of all other like enterprises, this fact should have been known. Then, again, other companies have been started by foreigners against which no opposition has been made by the Chinese officials.

I trust that your excellency will be able to bring about a speedy and satisfactory adjustment of the matter, and that Mr. Wetmore may be allowed to carry out the enterprise he has undertaken.

I am, &c.,