John Russell Young to Prince Kung, November 30, 1883

Mr. Young to Prince Kung.

Your Imperial Highness: Several reports have been made to this legation by Mr. Consul-General Denny, at Shanghai, Mr. Consul Seymour, at Canton, and certain American merchants doing business at these ports, in reference to the action of his excellency Viceroy Tseng, predecessor of his excellency Viceroy Chang, the present incumbent at Canton.

From these reports the following facts appear:

The United States merchants have been sending to China shipments of petroleum, which, as your imperial highness knows, is not only one of the largest and most valuable of our mineral resources, but a valuable part of our commerce with China.

As a fact, I may say that we supply petroleum to all the world. A recent discovery, in general use for less than a quarter of a century, it has been found one of the most beneficent agencies in nature, as a burning oil, a medicine, a fuel, and in other forms.

The apparently inexhaustible quantity found in the petroleum regions has made the production so cheap as to bring the cost within the reach of the poorest classes.

This is shown in the consumption of the oil in other Asiatic countries, especially in Java, India, and Japan, where its introduction has done great good to the poor.

Under the treaties the duty upon petroleum is 5 per cent, ad valorem, and American merchants are entitled to import it, paying this rate and no more.

This tariff has prevailed and now prevails at all the ports of China open to foreign trade, with the exception of Canton.

The former viceroy, some months ago, directed the imposition of a local tax upon all petroleum received in Canton of 40 cents a case. This tax is in addition and four times as large as that authorized by the treaty.

It was imposed, also, without giving the merchants any notice, so as to guard them in ordering shipments from home. It has thus entailed severe loss, amounting in the case of one firm to several thousand taels.

It furthermore seems that this tax has grown out of the fact that the recent viceroy granted to certain merchants in Canton the monopoly of selling kerosene for a yearly payment of $31,000. From this monopoly they gain a revenue of $200,000, at the expense of the imperial treasury, in diminishing the revenue that would accrue from petroleum in the ordinary course of a great and increasing trade, and which can only waste and die under this new burden, and also the comfort of your poorer people, who, because of this burden and the withdrawal of trade sure to follow it, will be unable to use petroleum.

The only expression of opinion I have been enabled to gather as to the reasons for this act is found in a copy of a letter addressed by his excellency Tseng to the British consul at Canton.

“The viceroy would observe,” says his excellency, “that once foreign goods have entered China and become the property of Chinese merchants, the method and amount of their taxation are matters wholly and solely within the discretion of China.”

Your imperial highness will see at a glance that the question is far different from that presented by the viceroy. In Article V of the treaty signed in 1844 by my predecessor, Mr. Cushing, and his excelleney the late Tsi Yeng, acting in the name of the throne, it is especially provided:

“At each of the said five ports, citizens of the United States lawfully engaged in commerce shall be permitted to import, from their own or any other ports, into China, and sell there, and purchase therein and export to their own or any other ports, all manner of merchandise of which the importation or exportation is not prohibited by this treaty, paying the duties which are prescribed by the tariff hereinbefore established, and no other charges whatsoever.”

Under the provisions of this treaty American merchants may sell or purchase any manner of merchandise not forbidden by treaty, paying the duties prescribed, “and no other charges whatsoever.”

In Canton, therefore, we have an undeniable and flagrant violation of this treaty. A tax has been imposed virtually adding 300 per cent, to what the law requires.

• It is, therefore, my duty to demand from your imperial highness the abrogation of this decree of the viceroy, as an invasion of treaty engagements.
• A return to the merchants who have suffered from this illegal act of the sums so exacted, with proper interest upon the same, to the end that no loss may fall upon them because of the action of the viceroy and the Chinese who hold the Government monopoly.

These are the only questions in which my Government has a direct interest. But one or two observations may not be without value as to the nature of the monopoly created in Canton. I have referred to the beneficent nature of petroleum; that it is one of the blessings of modern society, and that China has much to gain by its universal dissemination. China is far behind other Asiatic nations in the enjoyment of this valued product. The figures show that Java, with a population of 19,000.000, imports annually 1,900,000 cases; Japan, with 26,000,000, 1,800,000; and India, with 240,000,000, 1,500,000.

The low proportion of the Indian demand may be partly accounted for by the extreme poverty of large numbers of the Hindoos, who have difficulty in obtaining the means of existence. China, a rich country, with unbounded resources and a wider distribution among the people of the means of life, and a population believed to be far larger than that of the other three countries combined, takes only 900,000 cases of petroleum, 1,000,000 less than Java, 900,000 less than Japan, 60,000 less than India.

If monopolies like those in Canton are created, your imperial highness cannot fail to see that you are imposing a new tax upon your people. If petroleum were an article which your own mineral resources could supply; if there was anything in China which would do as much good at so low a price if it could be manufactured; if there were any Chinese interest to be served by it, this legation could look with forbearance upon any attempt to nourish and protect your interests.

It is a product of nature. It competes with no Chinese interests or industry. It is entirely for the advantage of your people, as it has proved to be to all classes of people throughout the world. There is every reason, therefore, why monopolies like the one in Canton should be suppressed. The first is the injury to your own people in keeping from them an agency that would add so much to their comfort and happiness. The second is the injury it must do to your treasury. We have a large trade, the revenue from which is an important factor in His Majesty’s exchequer. Were petroleum to be consumed throughout China in the same proportion as in Java and Japan, the trade would grow to a vast extent, to your enhanced gain. These monopolies encouraged, this profit to China would disappear altogether.

I volunteer these considerations to your imperial highness, not that they have any special bearing upon the immediate question which inspires this dispatch, but I am persuaded they will strengthen your imperial highness in your natural inclination to take an enlightened view of a most important subject. My duty is to point out to the cabinet the very grave wrong that has been done to our interests in Canton by the undeniable violation of treaty, and to repeat my demand that the additional tax be withdrawn from petroleum in American ships, and that what has been unlawfully exacted shall be repaid without delay, and with interest, at the rate now current in the money markets of China, from the time it was imposed.

In making this communication, I tender, &c.,