Russell Young to Prince Kung, November 14, 1882

Mr. Young to Prince Kung.

Your Imperial Highness: I have the honor to acknowledge the receipt of your imperial highness’s letter of the 31st ultimo, being an answer to my letter of the 24th of the same month, in which I laid before your imperial highness the request of an American firm at Shanghai, acting on behalf of a number of mercantile houses in China, to be allowed to lay a telegraph cable from Shanghai via Foo-Chow, Amoy and Swatow to Hong-Kong.

Your imperial highness refers in the preamble of your letter to certain conversations and correspondence which Minister Angell and Chargé d’Affaires Holcombe had with your imperial highness last year on the subject of a rumored grant of a monopoly to the Great Northern Telegraph Company, and you remind me that in that correspondence you informed this legation that his excellency Li, in initiating this policy and entering into an agreement for a term of years, was following a precedent established by Russia and France.

Your imperial highness further points out that this legation was informed that whenever an American company desired to lay a cable from Japan to China satisfactory arrangements would be made for them to do so, and that the agreement referred to was a petition prepared by the Great Northern Telegraph Company, submitting certain propositions to his excellency Li, which had been approved by him. But your imperial highness omits to add that you informed this legation that these propositions had not been submitted to His Imperial Majesty, and consequently had not been approved by him. From this declaration Mr. Holcombe, then in charge of this legation, drew the natural and, indeed, necessary inference that the proposed monopoly was void and of no effect, and hence he did not lay before your imperial highness further and more positive declarations as to the light in which my Government would view the granting of the proposed monopoly which he was instructed to place before you, and which it may become my duty to submit to your imperial highness.

As the foreign office has but recently again informed this legation, in a verbal communication with Mr. Holcombe, that the petition of the Great Northern Telegraph Company has still not been laid before the throne nor approved by it, I feel bound to express the earnest hope that your imperial highness will find no difficulty in recommending to His Imperial Majesty that the petition of the company should be put aside, and the injurious effects removed which an approval or upholding of it would have upon the interests of China herself and her relations with other powers.

The request which I thus address to your imperial highness is not based upon any wish to injure the legitimate ends and interests of the Great Northern Company, to which I wish every success which it may be able to obtain in fair competition with other companies or individuals, but is dictated solely by the necessity of frustrating the unwarrantable attempt of the company to obtain a monopoly which is contrary to the spirit of the international engagements entered into by the Chinese Government and the often repeated assurances of your imperial highness that all foreigners were to be treated alike in China, as well as injurious to the political, military and commercial interests of China herself.

That such is really the case and that the arrangement proposed by the Great Northern Company in its petition is in no way the same as similar arrangements concluded, by other powers, but that it is an unscrupulous attempt of the company to profit by the inexperience of the Chinese officials and obtain from or through them such advantages as would never be granted by any other Government, I shall now proceed to prove by taking, point for point, the arguments put forward in your imperial highness’s letter of October 31, and which I believe may fairly be considered to represent the arguments of the advocates of the arrangement proposed by the company.

These points are:

• That, according to the public law of Europe, the right to regulate the railway and telegraphic intercourse belonged to the Government of each country.
• That the arrangement proposed by the company to his excellency Li was the same as the arrangements usually made under similar circumstances by European Governments, and even less favorable to the company than those concluded by them with France and Russia.
• That it was at a moment when telegraphic communication had to be established for China that his excellency Li approved of a monopoly to the company, but only for twenty years.

With regard to the first point, the right of the Chinese Government to regulate its own policy in railway and telegraphic questions, it seems to me that the fact that I transmitted the petition of an American firm to your imperial highness indicates clearly enough that I recognize this right of the Chinese Government. Your imperial highness will, however, have to bear in mind that even the most indisputable right must be exercised with a certain caution and with due regard to the rights and interests of other parties.

The Chinese Government has the undoubted right to shape its own course in the question of telegraphic intercourse, but the grant of a monopoly for the whole Empire to a single company and the exclusion of all other companies and individuals from this line of industrial enterprise is certainly an unfriendly act, and will be viewed in that light by all foreign Governments whose subjects and interests suffer under the exclusion pronounced against them by the Chinese Government.

Your imperial highness states further that the arrangement proposed by the Great Northern Company to his excellency Li is the same as those concluded by the Great Northern Company with other Governments. This I must contradict most positively.

The arrangement between Russia and the company was entered into by the Russian Government because it wanted to obtain telegraphic communication between its possessions on the Pacific and China and Japan. Not wishing to disburse the heavy outlay which the construction of such a line would necessitate, the Russian Government accepted the offer of the Great Northern Company to construct it at their own expense and risk, and in order to compensate them for this work, which was of the utmost importance to the Russian possessions on the Pacific, the Russian Government granted to the company for thirty years the exclusive right of landing a cable on the shore of its possessions on the Pacific coast, a nearly uninhabited country, with a few towns, with hardly 10,000 inhabitants, and possessing neither industry nor commerce. The value of this concession for the company lies, it is true, in the fact that they can join their cable to the Russian land line from the Pacific coast through Siberia to Europe, but the Russian Government profited itself largely by the fact that this part of the telegraphic communication between Europe and Eastern Asia was gained for the Russian line. With the single exception of the Pacific coast, however, that is to say, of a small part of the Russian dominions, no concession to the exclusion of others was granted to the company. Can this be compared with the action of China, which excludes all competition and enterprise from its whole seashore, teeming with towns counting their inhabitants by millions, as well as from the interior of the Empire, and all for no advantage whatever save a doubtful economy of a few thousand dollars!

And again, the contract between France and the company.

Telegraphic communications between France on the one side and Denmark, Sweden and Russia on the other, had existed for a long time, but they all led through neighboring countries, and, in case of political difficulties, were likely to be interrupted, and so to cause serious embarrassments to the Government as well as to private individuals. Under these circumstances it was quite natural that the French Government should seek to establish new lines of communication with the northern countries, and so save herself from the danger of being cut off from them. To obtain this end, a concession was granted to the Great Northern Company for the construction of a single line from either Calais or Dunkerque to Denmark, Sweden and Russia. But no monopoly was granted to the company for the remainder of the French coasts or dominions, nor for her communications with other countries.

But, says your imperial highnesses letter, the concession to the company was granted when telegraphic communication had to he established for the Chinese Government.

To this statement I beg to demur most emphatically.

The contract between the China Telegraph Company, acting under the auspices and the orders of his excellency Li Hung Chang, and the Great Northern Company, referring to the construction of a telegraph line from Tien-Tsin to Shanghai, was signed on December 22, 1880. By it the Great Northern Company engaged itself to furnish a certain quantity of material and a certain number of engineers for the China Telegraph Company at certain prices and salaries and within and for a certain given time. The material had to be delivered in China by May 15, 1881, and for the work entailed thus upon the Great Northern Company a commission of 10 per cent. on the total value of the material, i. e., 3,932 taels, was given to it. The engineers to be employed in the construction of the line were to be paid certain salaries fixed in the agreement. There was so little thought then of a concession to be granted to the Great Northern Company, in order to induce it to accept these proposals, that, on the contrary, Article 4 of the agreement contains the following stipulation:

“For the maintenance of friendship, the China Telegraph Company hereby promises that should a separate sea cable be established at Shanghai, they will give their business to the Great Northern Telegraph Company, providing their rates be the same as those of the other company.”

The so-called arrangement between his excellency Li Hung Chang and the Great Northern Telegraph Company was concluded on the 8th of June, 1881; that is to say, six months after the conclusion of the contract before mentioned, and after it had been executed already; it is therefore impossible to say that the Chinese Government was bound to make the concessions contained in the latter arrangement in order to secure the conclusion of the former. Even the petition of the Great Northern Company contains no argument to this effect.

Now, what are the concessions made to the Great Northern Company?

• The Chinese Government grants the company exclusive monopoly for the submarine cables already landed on Chinese territory.
• Within a period of twenty years the Chinese Government will not allow any other company or person to land cables in the entire Empire, including all foreign settlements and Formosa.
• Within twenty years the Chinese Government will not construct or permit others to construct cables or land lines in opposition to any of the company’s cables.
• Preference in the construction of new telegraph lines by the Chinese Government will be given to the company.
• All telegrams for foreign countries emanating from Chinese lines shall, unless directed otherwise by the sender, be forwarded over the company’s cables to the Russian possessions on the Pacific coast and thence over the Russian land line.

And what are the obligations of the Great Northern Company in the face of these immense and unheard of concessions by which the Chinese Government, if they were ratified, would deprive itself of the right to extend its own telegraphic system and offend all friendly powers by excluding their subjects from a fair competition in an industrial enterprise?

“The Chinese foreign office and the two superintendents of trade for the southern and northern ports shall be entitled to exchange telegrams with the Chinese ministers and consuls-general residing abroad free of charges on the Great Northern Company’s cables in China, Japan and Europe.”

It is, therefore, as I had the honor to remark before, for the doubtful gain of a paltry sum of a few thousand dollars (the agent of the Great Northern Company in this petition fixed the pecuniary gain which the Chinese Government might have made in a year of unprecedented political activity at $33,300) that the Chinese Government, if it ratifies the arrangement with the Great Northern Telegraph Company, will barter away its own sovereign rights and the protection of its political, military and commercial interests.

But, might somebody remark, it was in order to gain the advantages accruing to China from the cable between Shanghai and Hong-Kong that the agreement was entered into with the Great Northern Company.

This view again could not be sustained by the fact.

It is by Articles 1 and 10 of the agreement concluded in October 11, 1869, between Russia on the one side and the Great Northern Company on the other, that the company bound themselves to lay a cable from the Russian possessions on the Pacific to Nagasaki, in Japan, and from there to Shanghai, Foo-Chow, and Hong-Kong. It was, therefore, not to serve the interests of China that the cable along its shores was laid, and no concession from China was necessary to maintain it there, as the company was bound to that course already by its engagements with Russia.

On the contrary, for many years the Chinese authorities objected most strongly to the landing of the cable of the company, and its being carried from the landing-place to the company’s offices in the settlements; and even so late as the autumn of 1877, the superintendent of the southern ports sent instructions to the local authorities at Shanghai to have the land line of the company between Wusung and Shanghai destroyed.

Your imperial highness having referred in your letter more than once to the usages and laws of Europe with regard to telegraphic conventions, and having compared the one attempted to be imposed by the Great Northern Telegraph Company on China with those in existence with other powers, I have seen myself obliged to enter into the above details with regard to the arrangement under discussion, and I can assure your imperial highness, as I believe you will have convinced yourself from the foregoing remarks, that no concession similar to the one claimed by the Great Northern Company has ever been conceded by any foreign Government, and that none similar would ever be conceded by any one.

It is not from a desire or the intention to meddle directly or indirectly with the internal administration of China that I address your imperial highness again on the subject, but from the firm conviction that it is in the interests of the Chinese Government themselves, as well as of the Chinese and foreign mercantile community, that the telegraphic communication between China and the outer world should not be intrusted to a single company. Where the erection of a land line or sea line through a company can be obtained only by the grant of a concession, the Chinese Government will be fully entitled to take such a course with regard to that line; but generally speaking, where more than one company are willing to run the risk of establishing lines at their own expense and without claiming any special advantages, it will be in the interests of every one to grant such request, as competition is certain to insure cheaper rates and better work, while it does away with the apprehension for the Government to see their linear of communication endangered by political complications or conflicts.

I have therefore the honor to place again before your imperial highness the request of an American firm at Shanghai to be allowed to land a cable at Shanghai, Foo-Chow, Amoy and Swatow, or if from political or military reasons the Chinese Government should prefer to see a land line established, to grant the permission to lay such a line to the petitioners, who, I have no doubt, will in either case be willing to give to the Chinese Government the same privileges on their land lines or sea lines which foreign Governments claim under similar circumstances, or which the Great Northern Company offers to the Chinese Government, viz, free passage over their lines for messages exchanged by the Tsung-li yamên and the two superintendents of the northern and southern ports with the Chinese minister and consuls-general residing abroad.

I have, &c.,