Wetmore to Cheshire, September 8, 1882

Mr. Wetmore to Mr. Cheshire.

Sir: Sometime before the departure of Mr. O. N. Denny, I had in hand the formation of a company for the manufacture of cotton yarn from native cotton at this port, an industry that has never been undertaken here, and which if developed would conduce argely to the prosperity of the country.

I had several conversations with Mr. Denny on the subject and was informed by him there was no reason whatever why I should not go on with such an enterprise and establish mills for the purpose on any convenient site in the vicinity. I accordingly organized a company with a capital of 300,000 taels, and shares for the full amount were subscribed for and about one-third of the money already paid in, when, in the issue of the native paper Shen Pao on the — — instant an article appeared to the effect that the formation of this company was an infringement of the rights of a certain other company, to which it was stated a monopoly for the manufacture of cotton fabrics in China had been granted for a period of ten years.

This article, without any signature, was given simply among the news items, but was furnished to the paper by the principal party interested in the company claiming the monopoly, and evidently for the purpose of intimidating the intending shareholders and preventing them from paying up their subscriptions; and this is precisely the effect that has been produced, so that at the present time the formation of the company is brought to a dead lock, and unless the statements in the article can be immediately contradicted in some way, I am very much afraid I will be compelled to abandon the project altogether.

I am committed to such an extent with reference to the company that such a result would have serious consequences for me, and I am anxious to make use of every lawful means to meet such a failure of the enterprise.

With regard to the company claiming a monopoly, I knew nothing at the time I commenced the formation of the one I have in hand, nor was I aware any company was in existence claiming such an exclusive right, until the article referred to appeared in the Shen Pao, nor do I know anything about it now except a vague report that some special privileges were granted to some company several years since for the manufacture of cotton cloth, but so far as I can learn no practical steps have thus far been taken to carry out the enterprise.

My contention in the premises is:

• First. That there is no law or usage in China authorizing the issue of such an exclusive privilege or monopoly (as that claimed) to any person or company.
• Second. That if there were, it should be done as in other countries, under letters patent, so as to give notice to the world and fair warning to others contemplating similar enterprises.
• Third. That the exclusive license for the manufacture of cotton cloth could not he construed to embrace cotton yarn.
• Fourth. That, therefore, in alleging a monopoly to which they were not entitled lawfully, and publishing the same for the purpose of interfering with the carrying out of our company, the practice therein implicated has inflicted on myself and those interested with me a serious injury for which they should be held accountable.

I am informed and believe that the Chinese officials generally are very desirous to develop manufacturing industries in this country by which their raw materials can be converted by machinery into fabrics which have a large consumption here, and in no direction is there such afield for such operations as in the use of raw cotton which is produced in very large quantities in this portion of the Empire.

It is stated that the company claiming exclusive privileges as aforesaid has, or proposes to have, a capital of 400,000 taels; With such a capital the production of cotton goods would be so insignificant in comparison with the enormous quantity used and imported here that it would not be worth even a mention. In the stabilities of trade it would occupy no perceptible position, when it is considered that cotton fabrics are imported into China yearly to the extent of about 15,000,000 pieces, worth over 25,000,000 taels, and cotton yarns exclusively from England and India to the extent of 150,000 pieces, worth 4,000,000 taels, it will be seen how insignificant would be the production of a company which could not work up more than thirty piculs of cotton per day.

The granting of a monopoly to such a company would be tantamount to the prohibition of the manufacture altogether, and it would be the same if the company had twenty times that capital. If therefore the rulers of China are really desirous to see factories springing up for the manufacture of one of their most important staples, they have taken a most effective step to prevent the carrying out of their own views, assuming they have made such a concession as is claimed, and that it could be maintained as against all others desiring to enter the field, as not only would it exclude others, but those who claim to hold the privilege do not seem to have taken any effective steps to carry it out.

When the field is so extensive there is room for not one company alone, but for hundreds, and I am safe in saying that ours would have no more effect upon the success of the other company than if, instead of making yarn, we were to make some article of an entirely different material and nature.

In asking your assistance in this matter, therefore, we are claiming nothing that interferes with vested interests, or inflicts an injury on any one. We are asking nothing that we are not satisfied we are justly entitled to and will therefore be greatly obliged if you will render us such assistance as may be in your power as early as possible, so that we may be able to give an authoritative contradiction to the article in the Shen Pao referred to, and at the same time have the means of satisfying the shareholders in the company that no official interference with the enterprise need be feared.

I am, &c.,