455
No. 53.
Sir R. Alcock to Lord Stanley.-(Received August 9.)
(No. 131) My Lord,
Peking, May 29, 1868.
IN Mr. Consul Robertson's Report of trade at the port of Canton during the year 1867, a duplicate of which was forwarded direct to the Foreign Office, two or three leading facts are brought out which seem worthy of serious consideration as regards their influence, present and prospective, on trade in general as it is conducted in China, and at that port in particular.
The Returns show clearly that in the import trade, consisting chiefly of English textile fabrics, there is a steady advance if we take quantity as the standard, though a decrease if value be the ground of comparison: that is, the Chinese have taken more of our goods, but less has been received for them; and these two facts no doubt stand to each other in the relation of cause and effect. The same goods costing them less than in the preceding year they took more, but still within the same or narrower limits of outlay on such articles.
32
Mr. Robertson's observations on the economical habits of the people are perfectly just, and afford the explanation. They are little disposed to spend in ostentation or luxury, whether in dress or in any other way, what means they possess.
When even a "necessary of life becomes from circumstances unusually dear, they simply do without it.' Hence it follows that a slight increase of cost promptly checks consumption. Of course this is an economic law of universal application, and it is a question of degree only. But it is precisely from that point of view that the distinctive feature of the national character and the habits of the people gives to the result a special importance. In other countries, where there is less thrift and habitual moderation in gratifying wants or desires, with greater love of luxury or ostentation, increase of cost only diminishes consumption on all articles ministering to these when the increase is something considerable, and as regards the necessaries of life the diminution will be still less; but here in China a very slight difference in price stops demand altogether in the first, and even tells very strikingly on the last.
127
It behoves the foreign merchant to keep this well in view. As regards our cotton goods, for instance, which may be considered the great staple of our import trade into China, whatever deteriorates the quality, renders it less durable or fitted to meet the requirements of the Chinese wearer, or adds to its price, tested by competition with the price, quality, and durability of the produce of the native looms, even though it be very slight, is sufficient to turn the scale in favour of the latter to the exclusion of the former, and for the reason alleged by Mr. Robertson that "no nation is more economical in its habits, and less influenced by outward appearance than the Chinese, from the highest to the lowest :" whether a long cloth is of finer texture or has a better glaze is a matter of infinitesimal importance to them compared with the soundness of its quality and its durability,
The foreign merchants in China must know this, but how far they and the manufacturers in England act upon the knowledge wisely for their own and the national interests, which are really one, is fairly open to question. If they sacrifice to appearance and cheapness quality tested by durability in wear they destroy the market. Some proceedings before the Courts of Bombay recently exposed a practice of falsification and dishonesty in the making up and dressing of goods for the Indian market, on the part of some of the home manufacturers, which had precisely this effect, and was sufficiently alarming to engage the attention of some of the Chambers of Commerce in England. I cannot at the moment turn to the report which appeared in the papers, but the case and all its leading circumstances must be very well known at home, I am not prepared to say how far similar practices may have damaged the credit of foreign merchants and their goods in China, although something of the kind is not wanting, I fear, to arrest the progress. But one thing is quite certain, that whatever impairs the confidence of Chinese purchasers as to the real quality of the goods sold them under particular marks or brands inflicts a fatal injury on the prospects of trade in the interior. Mr. Robertson alludes to an export trade in a class of "Lie Teas," well known at Canton. It is to be feared that those who help to poison people at home with a spurious article in teas will not be overscrupulous in dealing with foreign goods for the Chinese market.
It is not only necessary, however, that the goods should be honest in being what they profess to be, according to mark or description, but that the quality, as to the texture and durability, should suit the wants and habits of the people; and, lastly, that these should suit their pockets, and be able to compete in price with similar goods of native manufacture.
Unless they have these three qualifications they cannot compete in the Chinese markets, and, instead of the demand increasing, they will be shut out, though all China were opened, as fully as France and Belgium, to both merchants and goods.
There is another element in the price besides that of first cost which has hitherto been too commonly overlooked. When goods are brought into the Chinese market, the foreign merchant calculates by the value of the dollar or sycee silver, and rates of exchange on England, what he can afford to sell at. The Chinese takes a totally different basis of value, and calculates, as he must pay in dollars, how many cash these are worth in China, or in his own district where the goods will be sold. Now the rate of exchange of the dollars or silver in reference to Europe may be very low, and has been for the last two or three years, while its value in cash in the interior and at the ports may be very high, owing to various causes wholly independent of foreign trade; and this will determine the cost of the goods to the Chinese buyer, and consequently the price he can afford or will be disposed to give. Attention has only lately been drawn to this feature of the trade in the inclosed paper on "Copper Cash and the Tea Trade," contributed by Mr. Kingsmill a few months ago to the North China branch of the Royal Asiatic Society; a further article in the "Supreme Court Gazette" of the 16th of May is also inclosed, commenting upon it. The great influence this question of currency and exchange exercise, chiefly on account of the debasement in the only currency of China, the copper cash, which has a constant tendency to alter the relative value of the two currencies, the dollar and the copper coin, is clearly shown in these papers.
This is not the place for an essay on the economic principles which should regulate the action of Governments in the issue of a currency, and the futility of all efforts hitherto made to induce the Chinese Government to establish a Mint and issue a currency that could be guaranteed to the people is well known to your Lordship. My present object is only to draw attention to facts of great significance influencing the development of trade in China in a far larger degree than many of the facilities or obstacles almost
455
No. 53.
Sir R. Alcock to Lord Stanley.-(Received August 9.)
(No. 131) My Lord,
Peking, May 29, 1868. IN Mr. Consul Robertson's Report of trade at the port of Canton during the year 1867, a duplicate of which was forwarded direct to the Foreign Office, two or three leading facts are brought out which seem worthy of serious consideration as regards their influence, present and prospective, on trade in general as it is conducted in China, and at that port in particular.
The Returns show clearly that in the import trade, consisting chiefly of English textile fabrics, there is a steady advance if we take quantity as the standard, though a decrease if value be the ground of comparison: that is, the Chinese have taken more of our goods, but less has been received for them; and these two facts no doubt stand to each other in the relation of cause and effect. The same goods costing them less than in the preceding year they took more, but still within the same or narrower limits of outlay on such articles.
32
Mr. Robertson's observations on the economical habits of the people are perfectly just, and afford the explanation. They are little disposed to spend in ostentation or luxury, whether in dress or in any other way, what means they possess.
When even a "necessary of life becomes from circumstances unusually dear, they simply do without it.' Hence it follows that a slight increase of cost promptly checks consumption. Of course this is an economic law of universal application, and it is a question of degree only. But it is precisely from that point of view that the distinctive feature of the national character and the habits of the people gives to the result a special importance. In other countries, where there is less thrift and habitual moderation in gratifying wants or desires, with greater love of luxury or ostentation, increase of cost only diminishes consumption on all articles ministering to these when the increase is something considerable, and as regards
127
the necessaries of life the diminution will be still less; but here in China a very slight difference in price stops demand altogether in the first, and even tells very strikingly on the last.
It behoves the foreign merchant to keep this well in view. As regards our cotton goods, for instance, which may be considered the great staple of our import trade into China, whatever deteriorates the quality, renders it less durable or fitted to meet the requirements of the Chinese wearer, or adds to its price, tested by competition with the price, quality, and durability of the produce of the native looms, even though it be very slight, is sufficient to turn the scale in favour of the latter to the exclusion of the former, and for the reason alleged by Mr. Robertson that "no nation is more economical in its habits, and less influenced by outward appearance than the Chinese, from the highest to the lowest :" whether a long cloth is of finer texture or has a better glaze is a matter of infinitesimal importance to them compared with the soundness of its quality and its durability,
The foreign merchants in China must know this, but how far they and the manu- facturers in England act upon the knowledge wisely for their own and the national interests, which are really one, is fairly open to question. If they sacrifice to appearance and cheapness quality tested by durability in wear they destroy the market. Some
· proceedings before the Courts of Bombay recently exposed a practice of falsification and dishonesty in the making up and dressing of goods for the Indian market, on the part of some of the home manufacturers, which had precisely this effect, and was sufficiently alarming to engage the attention of some of the Chambers of Commerce in England. I cannot at the moment turn to the report which appeared in the papers, but the case and all its leading circumstances must be very well known at home, I am not prepared to say how far similar practices may have damaged the credit of foreign merchants and their goods in China, although something of the kind is not wanting, I fear, to arrest the progress. But one thing is quite certain, that whatever impairs the confidence of Chinese purchasers as to the real quality of the goods sold them under particular marks or brands inflicts a fatal injury on the prospects of trade in the interior. Mr. Robertson alludes to an export trade in a class of "Lie Teas," well known at Canton. It is to be feared that those who help to poison people at home with a spurious article in teas will not be overscrupulous in dealing with foreign goods for the Chinese market.
It is not only necessary, however, that the goods should be honest in being what they profess to be, according to mark or description, but that the quality, as to the texture and durability, should suit the wants and habits of the people; and, lastly, that these should suit their pockets, and be able to compete in price with similar goods of native manufac-
ture.
Unless they have these three qualifications they cannot compete in the Chinese markets, and, instead of the demand increasing, they will be shut out, though all China were opened, as fully as France and Belgium, to both merchants and goods.
There is another element in the price besides that of first cost which has hitherto been too commonly overlooked. When goods are brought into the Chinese market, the foreign merchant calculates by the value of the dollar or sycee silver, and rates of exchange on England, what he can afford to sell at. The Chinese takes a totally different basis of value, and calculates, as he must pay in dollars, how many cash these are worth in China, or in his own district where the goods will be sold. Now the rate of exchange of the dollars or silver in reference to Europe may be very low, and has been for the last two or three years, while its value in cash in the interior and at the ports may be very high, owing to various causes wholly independent of foreign trade; and this will determine the cost of the goods to the Chinese buyer, and consequently the price he can afford or will be disposed to give. Attention has only lately been drawn to this feature of the trade in the inclosed paper on " Copper Cash and the Tea Trade," contributed by Mr. Kingsmill a few months ago to the North China branch of the Royal Asiatic Society; a further article in the "Supreme Court Gazette" of the 16th of May is also inclosed, commenting upon it. The great influence this question of currency and exchange exercise, chiefly on account of the debasement in the only currency of China, the copper cash, which has a constant tendency to alter the relative value of the two currencies, the dollar and the copper coin, is clearly shown in these papers.
This is not the place for an essay on the economic principles which should regulate the action of Governments in the issue of a currency, and the futility of all efforts hitherto made to induce the Chinese Government to establish a Mint and issue a currency that could be guaranteed to the people is well known to your Lordship. My present object is only to draw attention to facts of great significance influencing the development of trade in China in a far larger degree than many of the facilities or obstacles almost
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