Prince Kung to Russell Young, October 18, 1882

Prince Kung to Mr. Young.

Your Excellency: I have had the honor to receive your dispatch of the 13th instant, stating that you are in receipt of a report from the acting consul-general at Shanghai, to the following effect:

Certain Americans and other foreigners had formed a company at Shanghai for the manufacture of cotton yarn. After the shares were allotted and arrangements made for the purchase of machinery, just as they were ready to begin operations, an apparently official notice appeared in a Shanghai paper, forbidding the organization of the company. The acting consul-general at once appealed to the customs taotai, who not only confirmed the Chinese newspaper notice, but added that he had forbidden Chinese merchants to take shares in the new company. After repeated and unsuccessful efforts to induce the taotai to reconsider his action, the acting consul-general has sought your intervention, &c.

This office has given careful consideration to your dispatch, and is of opinion that the customs intendant in his course in the case has not violated the treaty in any point. Your excellency is requested to carefully consider the following arguments:

Silk and cotton form the principal exports from China. The treaties negotiated between China and the several foreign powers plainly provide that foreigners may trade or pursue their avocations without hindrance of any kind from the local authorities at the ports open to foreign trade. Now, by the expression “may trade “is meant that they may traffic in or import or export all foreign and native merchandise. The phrase “may pursue their avocations” means that Chinese or foreigners may reciprocally employ either foreigners or Chinese as assistants or laborers at their own option and desire. A careful review of all treaty stipulations fails to show any stipulation permitting foreigners to manufacture native products at any of the ports in China. In connection with this subject, the foreign office has many times discussed with Mr. Von Brandt, the German minister, a code of regulations for native produce. Upon the point of native produce manufactured at the port, up to the present time no arrangement has been reached. It certainly appears that the manufacture by foreigners of native products at the port interferes with the revenue and hinders the commercial operations of native merchants.

The present formation of a company by foreigners at Shanghai and the purchase of machinery for the manufacture of thread by which raw silk intended for export is manufactured into another form of merchandise, has the effect to deprive Chinese subjects of their means of livelihood and diminishes the revenues of the Government. And since there is no plain treaty provision permitting such manufactures, it cannot be said that the customs intendant violated the treaties in forbidding foreigners to engage in them.

Still further. Some time ago the northern superintendent of foreign trade granted a monopoly for a period of ten years to a Chinese company at Shanghai for the manufacture of cotton cloth by machinery, authorizing Chinese to take shares in this company, but forbidding them to establish another. His action was laid before the throne and received the imperial approval. It will be seen that this was the first attempt made by Chinese to organize a company for the manufacture of cotton cloth by machinery, and certainly such an attempt should be fostered and protected for a term of years in order that it might gradually become profitable. If other Chinese were allowed to establish companies for the same purpose the first company named would meet with competition, and then it could not be established and become strong. Since, then, Chinese are not to be permitted to form other companies, how, on the other hand, can the privilege be conceded to foreigners?

The cultivation of the soil and weaving are occupations which closely concern the lives of the people. In that which relates to their means of livelihood the Government cannot fail to render them its support. Under the same circumstances in your own country your excellency would with great carefulness follow a similar plan.

In the memorial referred to above it was stated that there was in all western nations a universal statute providing that in the case of any new invention not before existing in the country concerned the discoverer was given the exclusive right to manufacture it for a certain number of years. Thus the plan adopted at Shanghai agrees with that pursued in western countries.

In reference to your observation that Chinese have established themselves in all parts of the United States in many branches of commerce and manufactures, from which they have derived large profits, I beg to remark that the good treatment shown by your Government to the Chinese is known the world over, and this Government is constantly in deep gratitude for it. But Chinese who have gone to other lands have not always been able to secure invariably the same privileges and immunities which are secured to foreigners who may come to China.

In a word, the plain language of each article of each treaty must stand for law; and as your excellency adverted to the treatment accorded to Chinese in the United States, it seemed best to make the comment given above.