WILLIAMSON, Minister Resident to Evarts, September 24, 1877

No. 9. Mr. Williamson to Mr. Evarts.

Sir: Referring tayour separate circular dated July 16, 1877, I have now the honor to make the following report in reply thereto:

You will please allow me to remark, by way of preface, that the circular is a recognition of the patent fact that one of the most important duties of American statesmanship is to bring into operation all legitimate means and agencies to secure to the United States a fair share of the trade of our neighbors in this hemisphere.

According to the latest statistics, the foreign commerce of the countries lying south of the United States, on the American continent, may be nearly estimated to be, at the present time, $520,000,000 in value, a sum nearly equal to one-half of the whole foreign commerce of the United States.

Of the $112,350,000 of our commerce with the states south of us on this hemisphere, probably not more than one-third consists in our domestic exports to them; for example, according to the Bureau of Statistics, the United States received, in 1876, from Brazil, Argentine Republic, Uruguay, and Venezuela, $56,736,176 of imports, and sent those states only $13,322,809 domestic exports. During the same year, and according to the same authority, we received from Mexico $12,505,753 in imports, and sent to that state $4,706,778. The balance of trade, therefore, appears to be largely against us, and if the old rule be true (as I believe) in political as well as private economy, that he who sells more of his produce to his neighbors than he buys of theirs makes more profits out of them than they out of him, the states south of us are deriving a much larger profit from the United States than the United States are deriving from them. It is lamentable to note, in this connection, that we only carry in our own bottoms about one-third of the whole value of our trade with the states south of us, so we are not large gainers by the freight on the articles we receive from and send to them. This is not, however, true in regard to Central America, for our entire trade with it is carried by means of our own ships.

The products of our factories are fully equal, and in many classes superior, to those of Europe. Our breadstuff’s should find a ready market in that vast area of this hemisphere embraced within the tropics. Our proximity and a certain sympathy arising therefrom, and from some similarity of institutions, ought to give us an advantage over European competition. Yet the United States enjoy but a fractional part of this trade, when by energy upon the part of our merchants and manufacturers and well-directed statesmanship we might reap the benefits of nearly the whole. With our superior civilization and more persistent energy we ought to become the manufacturers for the peoples south of us. With our immense extent of sea, lake, and river coast, and our great supplies of iron, coal, and timber, we ought, it would seem, to be able to supply sailors and vessels to do all the carrying-trade between them and the United States.

I do not aspire to take a conspicuous part in the solution of this great problem, and shall be content if the following report may contain some useful hints on this most interesting subject, so far as it is connected with the states of Central America. By reference to my No. 40, dated October 16,1873, and the circular-letter therewith sent, you will observe that immediately after entering upon the discharge of my duties I began to devote myself to the study of this subject in its relations to the Central American States, and my dispatches from time to time since have contained various suggestions in connection therewith. Notwithstanding I feel my inability to make such an exhaustive report as would be fully responsive to the scope of inquiry embraced in your circular of the 16th July, I shall give you such information as I have gathered and express such opinions as may appear pertinent.

1. My experience here in collecting information upon commercial and financial subjects confirms the opinion expressed in my No. 40, and subsequent dispatches, of the necessity of a reorganization of our consular service in Central America as a first step toward facilitating the acquisition of information that may lead to the removal of some of the obstacles to our obtaining a larger share of the trade of these States. If a consul-generalship were created, the gentleman filling that position would be entitled to require of consular officers reports upon the commerce of their respective localities, which those officers are not bound to give in response to the inquiries of a minister who has no direct legal authority over them.

Without intending to reflect upon the members of our consular service in Central America (some of whom are very efficient), I beg leave to say that it has been most difficult for me to get consular officers to procure even the official, commercial, and financial reports published by the governments of the countries in which they reside. It may be added that although I am in correspondence with all of them of every grade I have never had the good fortune in a single instance to receive from any of them a copy of a commercial report. This statement is not made with a view of censuring them, for it is no part of their duty to make such reports to a minister. If they had an intelligent chief, either by the creation of the office of consul-general or by superadding that office to that of the minister, as I have several times had the honor to suggest, the consular officers would be obliged to make their reports to him, and could be required to give detailed and special information on commercial subjects.

Perhaps the consular officers in these States make their reports to the Department as regularly as those in other quarters, but it has been mortifying to me to witness that so few of them have furnished information thought worthy of publication with the annual Report of the Secretary on the subject of commercial relations.

Possibly I attach too much importance to the necessity of a reorganization of our consular service, yet, entertaining the opinions I do, it would be remissness on my part to fail in giving them expression upon replying to your circular.

2. There is no doubt in my mind but that our merchants and manufacturers have, owing to our high tariff and the great commercial prosperity of the United States until within the last few years, found such profitable markets at home that they have not thought it worth while to trouble themselves to study the tastes and habits of our Central American neighbors. Taking the “newspaper-man” as ail exponent of intelligence, one might say there is a lamentable ignorance prevailing in our country as to what is the geographical position of these countries; for items of news from Guatemala, Salvador, Honduras, Nicaragua, and Costa Rica have been often seen in some of our leading newspapers under the caption of “South America.” Mr. Stephens’s and Mr. Squier’s most interesting books have seemed to create an impression that these States are more fitting for the explorations of seekers after American antiquities than for the more practical pursuits of the “commercial traveler.” Socially and politically these populations may be nearly stagnant, but their increased volume of foreign commerce indicates that agriculturally and commercially they are moving onward.

Without apparently an effort upon the part of our countrymen, and. in the face of some disadvantages which are hereafter pointed out, our trade with Central America increased from $943,654, in 1864, to nearly six millions in 1874, according to my commercial report accompanying dispatch No. 407. There has been a considerable falling off in the volume of our trade with them since that year. This result has been due, in my judgment, mainly to the enterprise of German and French mer chants and manufacturers, and to the lack of interest in these countries felt by our traders; for the commercial statistics in respect to Brazil, Mexico, Chili, and Peru show that wherever American merchants and manufacturers have taken the trouble to seek trade in Spanish America, they have always been rewarded by partial if not complete success.

From these remarks it will be seen that in my opinion, and according to my observations, the fields of commerce in Central America have not been cultivated by our commercial people, and that the employment of more enterprise in this quarter is likely to yield a satisfactory harvest. They may become the harvesters and cease to be the gleaners notwithstanding the obstacles hereafter mentioned.

3. It might be supposed from our having so little commerce with Central America, and Great Britain so much, that the latter country has more commercial men residing here than the United States. Such a supposition would be incorrect. There are more American than British merchants in these States, and more German tlian of any other nationality. The Germans are, in fact, in charge of the principal commercial establishments in every one of these States. Although they export to and import from other countries more largely perhaps than they do to and from Germany, they derive a much larger share of the profits than their correspondents, and Germany is therefore profiting, in my judgment, more by the Central American trade than any other country.

The system pursued by the German merchants in these countries appears to be an admirable one. I cannot pretend to give you the whole of the system but only one important feature of it. As a clerk shows himself competent to manage business he is gradually promoted in pay, until he becomes a partner with a small share of the profits. When his fitness to take charge of the business is pretty clearly established his interest is increased, and the elder partners retire to Europe, leaving to the new partner the local management. Three of the largest commercial establishments in Central America are now conducted by Germans who were clerks,at very small salaries less than fifteen years ago.

The Germans and not the British, in my judgment, are our real competitors for the trade of the whole of Spanish America. The practical commercial training of their young men gives them an immense advantage over us. The facility of the German in acquiring languages is in unhappy contrast with our heretofore notorious national deficiency in speaking foreign tongues, and is an advantage not to be gainsaid. The low interest upon money in Germany is another advantage, and the readiness with which the wealthy Germans give credit or intrust money to their enterprising young men of good character and fair training gives Germans opportunities of doing business in Spanish America which few of our young countrymen could expect to obtain.

Returning to the subject of the Spanish language, I would unhesitatingly recommend that its study be encouraged in all our schools (and especially commercial) in preference to French or German. The best “openings,” as they are called, for our young men in commerce, engineering, dentistry, and medicine are in Spanish America, but without a knowledge of the Spanish language it will be most difficult for progress to be made. To know how to write and speak that language fluently is the best passport and recommendation a young man can have among Central Americans. All his letters will be of little service unless he speaks “the idiom.” If he happily speaks that well, he receives a degree of marked attention from the natives that would surprise him. In truth, if we are to have a continental policy, commercially or otherwise, we must know more of our Spanish American neighbors, and above all know their language. It is easy of acquisition and beautiful in construction.

4. But when our consular service in Central America is better organized; when our merchants and manufacturers use greater energy in endeavoring to secure a fair share of its trade; when German competi-tion is less to be feared because our young men have become equally well-trained and are trusted with credit and money as the young German, still there may be difficulties of detail to be removed. These I shall now attempt to mention briefly under one heading.

The statements are made partly upon the authority of reliable merchants, and partly as the results of my own observations and experience.

Insurance from New York to Central American ports is 2 per cent.; that from European ports 1 per cent. Commissions in New York for buying and selling are 5 per cent., and in Europe 2½ per cent. Interest in New York and San Francisco is higher than in Europe, and credits for goods and for money are shorter. American packing is notoriously bad, and European packing is most artistically done, with the intelligent view of diminishing bulk and securing the safe delivery of the article packed.

Why commissions should be so much higher in the United States than in Europe has never been satisfactorily explained, nor have I been able to understand why our packing should be almost uniformly worse than English or French. I will give some hints on this subject, which is so important when it is considered that the goods received in Central America have to pay very high freights and are subject to the roughest handling.

Packages should never be large. They should be as securely put up as possible. The smallest waste in space should be avoided if possible. Cotton goods should be subjected to hydraulic or steam pressure, and then be wrapped in coarse blaukets, coverlets, &c. (which pay no duty if used as packing), water-proof material, and bagging. I have often been shown American cotton goods, that have been damaged by water, but have never yet seen a single instance of a like kind resulting from European packing. The charge for packing in the United States is much higher than in Europe, and I must say from my own personal experience that it nearly deserves the bad name it has in these States. I think, however, we are improving in the art of packing.

As I have not had the good fortune to have a commercial training, I express myself with reluctance upon some parts of this subject, and particularly on the following:

The advertisements and circulars and price-lists of our countrymen lack that precise explicitness in respect to details which is found particularly in English and French papers of a similar kind. In house-furnishing and in making purchases of dry goods, groceries, &c., for domestic use, (in which I have had some experience), I beg to say I have been mortified at the difference between the leading New York dry-goods store and a leading London dry-goods shop, between the leading New York house-furnishing and a London house-furnishing shop, between the leading San Francisco dealers in canned goods and an English shop dealing in the same class of goods, between a leading New York clothier and a respectable tailor of Paris or London, not only in the matter of prices, but in the complete and full responses to inquiries one gets from the European market, and the hurriedly-written, incomplete, and often impatient replies from my countrymen. As a general rule, the English and French circulars, illustrated catalogues, and other forms of advertising are models of thorough exactness and minuteness of details, and are worthy of closer imitation by oar manufacturers and merchants who have attempted to follow their lead.

5. It will be seen from the following statement of freights that San Francisco enjoys, in respect to them, a great advantage over any American or European city, but that New York, notwithstanding her proximity has scarcely an appreciable advantage over London, Havre, Southampton, and Hamburg. The rates given are for staple articles, such as coffee, and average goods exported and imported to and from San José de Guatemala. They have been furnished me by one of the most respectable houses of this city. Freight by steamer from San Francisco, to and from San José de Guatemala, is $15 per ton; New York, to and from same, 85 cents per cubic foot and 13/5 cents per pound, or $34 by measurement and $32 by weight; London, to and from same, $37.50 per ton and 5 per cent. primage from San José to London; Southampton, to and from same, $31.25 auVl 5 per cent. primage; Havre, to and from same, $36.25 and 5 per cent. primage; Hamburg, to and from same, $35 and 5 per cent. primage. By sailing-vessels from San Francisco freight to and from San José is $8, $10, and $12 per ton, depending upon charter. By sailing vessels from ports of great Britain, France, and Germany, to San José, freight is $10, and $15 per ton back to those ports.

Freights from New York may have been reduced by the Pacific Mail Steamship Company to the lowest remunerative point, but I am told by the head of a leading German house here that he finds it much cheaper to buy his American goods in New York and ship them to Hamburg by sail, and send thence by sail around Gape Horn to San José, than to pay the steamer freights from New York. He mentioned kerosene oil particularly.

As stated in my No. 588, dated March 5, 1877, there are a number of European sailing-vessels that bring and carry goods and produce to and from Central America.

6. The tariffs of the Central American States appear to be regulated solely with the view of raising the largest amount of revenue, and therefore, without regard to their effects, either upon the commerce of the States or the convenience of their inhabitants. That of Guatemala affords a notable illustration of the correctness of this statement, as will be seen from the following data, taken from the official report of July 10, 1877. That report shows that the duties collected upon the articles written in the first column, whose values (as stated) are placed in the second column, were as follows:

It will be seen from the foregoing table bow obstructive to trade the tariffs of some of these States are. You will also not fail to observe that the duties levied upon flour, preserved or canned meats, fruits, &c., medicines, iron goods in different forms, petroleum, furniture, and ready-made clothing, which our country has special advantages for supplying cheaply, are out of all reasonable proportion to articles of luxury, such as mirrors, toys, fine jewelry, perfumery, fancy goods, and glassware, that chiefly are supplied from European markets. And when it is considered that the merchant has to pay these high duties in cash before he can take his goods out of the custom-house, and has to pay freight at a high rate in advance, it is not difficult to see how few of our young merchants are able to engage in commerce in Central America. If, however, one should surmount those financial difficulties, he will find that to compete with established houses he must sell his wares on long time (say twelve months), and not send his bill to a customer until it is asked for.

It is but just to remark that I feel perfectly confident the difference in tariff-rates against articles imported from the United States does not result from a disposition upon the part of the governments of these states to discriminate in favor of European markets. All my influence has been exerted to correct the difference, but my efforts have been unsuccessful, principally (as I believe) because of the peculiar character of the several governments, the want of any fixed national or financial policy upon their part, and their continually pressing pecuniary necessities. To me it appears the only remedy is to be found in commercial treaties based upon the principle of reciprocity.

In November, 1875 (vide my No. 457), I had this honor to transmit to the Department translations of the tariffs of all these States. It was a tedious and laborious work to make them, bat 1 fear it may have proved unsatisfactory, as I have not heard of them since. The changes that have been made render them comparatively useless now. The tariff rates of Guatemala have been nearly doubled, and an export duty has been levied on coffee. The tariff of Salvador has been completely remodeled so as to conform to that of Guatemala, according to the treaty of 1876. That of Honduras has been wholly changed. That of Nicaragua has been changed lately by the levying of a high export duty on the principal products of that country for export. The tariff of Costa Eica alone remains about the same.

7. Referring to that part of your circular desiring information “as to the demand for different kinds of manufactured articles now used in the Central American States, and whether they are of the character which it is probable the industry of the United States can supply; also, as to the products of the Central American States in which the trade with the United States could be increased, either by legislation or executive action or by commercial enterprise,” I beg leave to say that, although I feel my incompetence to answer satisfactorily, I shall give you, as clearly as I can, the results of my observations and inquiries since coming here in 1873.

A former part of this dispatch conveys the opinion that, according to my judgment, legislative and executive action is desirable for the purpose of reorganizing the consular service in Central America, and I have also attempted to point out how little American commercial enterprise has made itself felt in this quarter. It is easy to write of such generalities, but difficult without special training to give satisfactory information as to the kind of goods best suited to these markets, and the class of exports from these countries in which we may increase our trade.

Following my, perhaps, incorrect idea of political economy, it seems to me if we can succeed in inducing these people to make their purchases principally in our markets, we may naturally expect them to ship us their produce in payment; for it so happens their productions are of the kind largely consumed in the United States. Their chief product for export is coffee, and the only other article they can ever expect to export largely is sugar. Cochineal and indigo are grown and exported still, but the industry and capital engaged in that branch of agriculture are fast finding their way into coffee estates. Cocoa is also grown extensively in some localities, but owing to the delicacy of the cocoa-tree and to its requiring low altitudes and moist climates for its profitable cultivation, I do not believe that product is ever likely to be grown to a sufficient extent in Central America to make its exportation an item of sufficient value to take note of. The present product of cocoa is scarcely sufficient for domestic consumption. We may then take the general view of these States that they are to be considered by the statesmen of our country as agricultural—producing coffee and sugar—as non-manufacturing, and as non-producers, to any considerable extent, of the wholesome and robust food of our more temperate and favored country. Now, it so happens coffee and sugar are consumed to an immense extent among our thrifty people, and their consumption per capita is likely to increase rather than diminish.

According to the “Sugar Planter,” we consumed in the United States, in 1875,685,352 tons of sugar, of which we imported 621,852 tons. According to the Bureau of Statistics, we imported in the commercial year 1876 sugar and molasses to the value of $66,295,553.

Our importations of coffee for consumption amount, according to a standard authority before me, to about three hundred millions of pounds per annum. The report of the Bureau of Statistics states that in the commercial year 1876 we imported coffee to the value of $56,788,997. It appears we are the largest consumers of coffee in the world except the people of Belgium, Holland, and Denmark. Our rate of consumption is stated to be 7.61 pounds per capita. It is worthy of note in this connection that, according to the Journal of Commerce of San Francisco, out of the 9,849,913 pounds of coffee’ received in that city during the year of 1876, Central America supplied 7,649,270 pounds. How to get from these States articles we consume as largely as coffee and sugar, by exporting the products of our industries instead of exporting coin, is a problem whose solution is involved in the correct answer to the first part of your inquiry already quoted.

By reference to Table No. 1, hereto attached, you will see the principal articles that are imported into Guatemala from all countries. The same list of principal articles of importation may be applied to all the other States, for their importations are not dissimilar in kind. There is not a single article on the list that could not be supplied by the industries of our country. But the first step toward supplying them is to reduce commissions and insurance to the European standard, and to study the habits and taste and necessities of these people. Our cotton goods are selling well among them, and the trade might be rapidly increased, in my judgment, if a little more attention were paid to lengths of pieces and styles of patterns of printed or colored goods. Our machinery, sewing-machines, agricultural implements, medicines, perfumery, soap, furniture, and many other articles are highly esteemed, and some of them are extensively imitated by our European friends; but when insurance and commission are double European rates, and interest is higher, and credit is shorter, and packing is more costly and more imperfect, we cannot reasonably expect to be patronized if our goods are not much cheaper than those of other countries offering equal commercial facilities at less expense.

There are many articles consumed in these countries which might be manufactured by our countrymen and supplied at good profits, but to enumerate them in detail would be too tedious, and I shall only say that it seems to me we ought to be able to supply these people in a few years with nearly every article that is made of cotton, or into whose manufacture that staple largely enters. The same remark is applicable to furniture, machinery, agricultural implements, pumps of different kinds, and other products of our iron industries. As it would consume too much of your time for. me to go into details on this branch of the subject, I will say that I shall be happy to answer questions our merchants and manufacturers may address me, or put them in correspondence with reliable houses here that are strongly inclined to cultivate trade relations with the United States.

8. The tables annexed, numbered from 1 to 11, have been prepared with great care, and I hope are correct. It is with pain that I notice that my sum total of our trade with Central America differs so widely from that given by so high an authority as the Bureau of Statistics. By my report our total direct trade with Central America for last year is $4,678,708.86. If to this be added the indirect trade given by the Bureau of Statistics, $300,494, we shall have a total of direct and indirect trade amounting to $4,989,202.86. The total reported by the Bureau of Statistics for the year ending the 30th June, 1876,is $2,897,89L Without disputing the correctness of that statement, I present you the data upon which mine has been made up. It is to be observed that the periods covered by the report of the bureau and by my report are not identical. That of the former is for the year ending 30th June, 1876. My report for Guatemala and Salvador covers the calendar year 1876; that of Honduras is for the year ending 30th June, 1876; that of Nicaragua is for the year ending 30th September, 1876, and that of Costa Bica is for the year ending 30th April, 1877. This difference of periods does not explain satisfactorily the great difference in the totals. My data are as follows: The totals of foreign commerce of Guatemala, Salvador, and Costa Rica are taken from the published official reports of their respective governments; for Honduras the published official report of Mr. Consul Frye, of Omoa and Truxillo, and the private report to me of the agents of the Pacific Mail Steamship Company at Amapala, have afforded the data for the total of that state; for Nicaragua the total foreign commerce is made up from the published report of Commercial Agent Sibell, of San Juan del Norte, and the official report of the government of that country. The totals of our trade with Guatemala and Salvador are taken from the official reports of those states. The total of our trade with Honduras is made up from the aforesaid report of Mr. Consul Frye and the report of the Pacific Mail Steamship Company’s agent at Amapala. The total of our trade with Costa Rica is made up by estimating our trade with that country as equal to our trade with Salvador (about 15 per cent.), which I am quite sure is not an overestimate, and our total trade with Nicaragua is made up from the aforesaid report of Commercial Agent Sibell, and from an estimate of our trade through the Pacific ports of Nicaragua, upon the same basis as our trade with Salvador, an exclusively Pacific state. In my judgment and according to.my information, the estimates are rather below than above the mark. However, I do not claim accuracy in the data, for I am conscious that in the official reports of the government of these countries there is an evident tendency to overstate the amount of their foreign commerce.

9. In this connection, and referring to that part of my No. 588, dated 5th March, 1877, in which it is stated “that under existing conditions San Francisco enjoys advantages over any other city of the United States as a base from which trade relations With these states may be promoted,” I beg leave to call your attention to the difference between the commerce of Central America through Caribbean (or so-called Atlantic) ports and the ports on the Pacific.

Through Caribbean ports.

^* This is official, but I am sure it is too low, for most of the coffee of Vera Paz goes out by the port of Izabal.

Total foreign commerce of Central America, through Caribbean ports, $2,850,707.55. (See tables attached.) Deducting the foregoing sum from the total foreign commerce of Central America, $22,611,506.68, we find that the commerce through Pacific ports amounts to $19,760,799.13.

I have thus attempted to answer your interesting circular fully and freely; and from time to time, as you have instructed, I shall have the honor of making further communications on this subject “when suitable occasions shall offer.” It is hoped this report and the tables annexed may be found correct, and may receive the approval of the Department.

I have, &c.,

Table I.— Importations into Guatemala during the year 1876. by principal articles.

Table 2.—Importations into Guatemala during the year 1876, by principal countries.

Table 3.—Exportation of products from the republic of Guatemala during the year 1876, by principal countries and articles.

Table 4.—Importations into and exportations from the republic of Salvador for the commercial year 1876, by countries.

Table 5.—Exports from the Bay Islands, Truxillo, Omoa, and Puerto Cortez of Honduras tathe United States and other countries during the year 1876.

Imports into the Bay Islands, Truxillo, Omoa, and Puerto Cortez of Honduras, from the United States and other countries during the year 1876.

Table 6.—Importations into Nicaragua by principal countries and articles, through the port of San Juan del Norte, for the year ending September 30, 1876.

Importations into Nicaragua by the ports of Corinto and San Juan del Sur, and by Chinandega, for the year 1876.

Table 7.—Exhortations of Nicaragua by principal countries and articles, from the port of San Juan del Norte, for the year ending September 30, 1876.

Exportations from Nicaragua by the ports of Corinto and San Juan del Sur, and by Chinandega, for the year 1876.

Table 8.— Exportations from the republic of Nicaragua during the year 1876, by principal articles.

Table 9.—Importations into the republic of Costa Rica by weights and articles, and to value, from May 1, 1876, to April 30, 1877.

Total value, as per report of minister of hacienda, $2,000,000.

Table 10.—Exhortations from Costa Rica from the 1st of May, 1876, to the 30th of April,1877, by principal articles.

Table 11.—Total direct foreign commerce of Central America by States, according to the last official reports.

Total direct foreign commerce of Central America with the United States, by States.