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The Customs statistics show how British trade has hitherto reigned supreme in China. My reason for writing to you is that I think there is some ground for doubting whether this supremacy will be maintained in the future. While the native population of Shanghai numbers about 400,000, the foreign residents do not exceed 5,000; but, during my stay, there was a large influx of foreigners, and rents were going up by leaps and bounds. A local newspaper in October estimated that if the influx continued at the same rate for twelve months, there would be a foreign population in the Settlement of close upon 20,000. Now, it is an undoubted fact that the majority of the newcomers were not English. They were of various nationalities, but mostly German.
There is a feverish activity in French and Russian quarters to promote the political influence and, to some extent, the commercial interests of Russia and France in China, but probably the greatest danger to our commercial supremacy is threatened by the Germans. There may not be a conspiracy, but there is something like concerted action on the part of all three to oust England from the preeminent position she has hitherto held in the East.
I believe the effort the Germans are making to displace English goods by their own must, in some measure, be successful, as they supply their goods at much lower prices than English manufacturers. It is true their wares, in most cases, are inferior in quality, but they are often as good as the Chinese require, and the teeming millions of China will absorb immense quantities of cheap goods. But not only do German merchants sell more cheaply, and German Commission Agents work for less brokerage, but many of them are as unscrupulous as the Japanese in their mode of doing business. China has always been a splendid field for the disposal of fraudulently marked goods, and this point specially calls for the attention of the British Government, because it is a mode of attack against which, in the nature of things, combined action on
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