COMMERCIAL RELATIONS WITH CHINA. MR. CARDWELL: I rise to bring under the notice of the House the report of the Select Committee appointed in the year 1847 to take into consideration the present state of our commercial relations with China; and I hope, Sir, notwithstanding the lateness of the hour, that the House will allow me to bring forward the Motion of which I have given notice for this evening. And, in doing so, I must say that I regret it cannot be introduced to the House by my noble Friend (Lord Sandon), who, in the last Session of Parliament, presided over the inquiry, and who prepared this able report. I have also to apologise to the other Members of the Select Committee for taking or appearing to take the subject out of their hands. But, considering the early period of the Session at which the financial statement, as has been announced by the noble Lord opposite, will be made, and finding that no notice upon this subject has as yet been given, I thought it was one which should not be allowed to slumber, and that there should not be a consideration of the financial prospects of the year without any reference whatever being made to the evidence and report I hold in my hands. To the importance of the subject it cannot be necessary for me to call attention. It cannot be necessary for me to call the attention of the House to the expectations that were entertained with respect to the prospects that were to be opened to our traders and manufacturers by the establishment of free intercourse with the great empire of the East, for the House is fully conscious of the necessity of finding continually fresh and increasing outlets for the productions of our great manufacturing powers. And we are also, too, conscious that it will be necessary, if our large manufacturing population are to be kept in a condition of employment and increasing comfort at home, that we must go beyond the limits of Europe, and the supply of the demands of civilised nations, and seek still further outlets for British manufactures. In some respects the trade with China did appear to bear out the expectations that had been formed of it. The export trade which, in the year 1827, amounted to 610,000l., had in 1843 grown to nearly 1,500,000l., and in 1845 it amounted to 2,394,000l. But this was not all that we were encouraged to expect from the opening of the trade with China. When fifteen years ago the trade with the eastern em pire was opened to general competition, we were told that the population of an empire like China, represented generally as amounting to 300,000,000--a population comprising a very large portion of the entire population of the globe-a people not by any means deficient in civilisation, and, though existing under such different circumstances from ours with regard both to production and consumption, abounding in industry and the spirit of commerce-and with such a people we promised ourselves that our export trade would have greatly exceeded 2,400,000l. before this time. We have not, however, been in that respect gratified; but such as the trade with China has been, a very large portion of it has fallen to this country; and it is important to our domestic interests that we should, so far as we possibly can, encourage and increase it. Let us take the returns of 1845. They show that, of 20,000,000 of dollars value of ordinary trade, no less than 16,000,000 were imported into China in British ships, and 3,000,000 in American ships, leaving not 1,500,000 dollars worth of imports for the ships of all the rest of the world. There is, besides, another large branch of trade not included in these returns-I mean the trade in opium-the larger proportion of which belongs to the dependencies of this country, and which amounts in addition to 23,000,000 dollars. So that out of imports to the amount of 43,000,000 of dollars, little more than 4,000,000 belong to other countries. Now, Sir, this is not a trade that can be disregarded by those who have any interest in the commerce of this country. But this trade, as the House will observe, sustained about the year 1843 a most remarkable increase; for while our exports to China had never before exceeded about 1,000,000l., they suddenly rose at that period to a million and a half, and from that to two millions. Sir, I am sorry to say that we found in this Committee, as stated in the first page of the report, that that increase of trade has been attended with no corresponding benefit to England-that the great increase of trade which has taken place has been attained by carrying on trade at a loss, which may be stated on the whole to amount to from 35 to 40 per cent. Now, notwithstanding this loss, the increased trade has now gone on for three or four years. This circumstance, I believe, may be thus explained: The trade was at first in the hands of British merchants, who, when it ceased to be remunerative, discontinued it. But it a direct barter trade, it is obvious that unless means can be found to take from the Chinese a larger amount of their principal export, tea, there seems to be but a limited prospect of deriving for the British manufacturing interests all those advantages which the new position which we hold in this country consequent upon the late war might lead them to expect." was then taken up by the manufacturers, | imports. The China trade being essentially anxious to find a market for the increasing produce of their manufactories. It turned out unsuccessful in the hands of the manufacturers; and it was then taken up by the natives in China, with the view of finding a market for their teas. It was also unremunerative to them; and the consequence naturally to be expected was the diminution of the trade, until it reached that point when it would be profitable to the merchant. The result was such as necessarily follows, for unless trade can progress profitably it must necessarily contract, and after being carried on on an extensive scale it will invariably go down again until it reaches a limit at which it can be a remunerative trade. But why have we found the trade with China to be an unremunerative trade? What are the returns that China has as yet made for the commodities which she has received? These returns comprise three principal articles. They are silver, of which about 2,000,000. is annually exported; silk, which to the value of 1,500,000l. is annually exported; but, after you have done all you can in the way of returns by silver and silk, you come to what must always be from China the great article of export-I mean, of course, the article of tea, of which about 6,000,000l. worth is annually exported. In a despatch from the British Consul at Canton, dated the 15th February, 1847, I find these words : "Assuming that the American and the trade of other foreign nations leaves an excess of exports over imports of about a million sterling, the approximate balance of trade against China would be nearly two millions, constituting the sum annually drawn from this country in specie to pay for opium. How long the Chinese will be able to sustain this continual drain of the precious metals is impossible to determine; but the fact being now Now, why is it that we have been unable to take a larger quantity of tea? The House will not be unprepared for the discovery of the Committee on this matter, that it is the rate of duty which we have been obliged to levy on tea which has retarded the export trade from China to Great Britain. The import duty on tea in this country may be taken as averaging upwards of 200 per cent on the export cost of the article. An instance was lately brought under my notice of a quantity of tea of a very inferior kind purchased in Liverpool, and which I believe ultimately went for the supply of a poorhouse in Cork, on which the duty paid was 1,000 per cent on the price of the tea. But it is not merely the amount of duty levied, but the fact that the levying of a high rate of duty requires a greater amount of profit on the capital employed, which presses injuriously on the trade. It has been stated by competent authorities that a duty of 2s. 2d. a pound to the revenue, is equivalent to 2s. 9d. a pound to the consumer. So that, independent of the duty, the ordinary profit on the amount paid in the shape of duty, is, in the instance of the inferior article, actually double the value of the tea. As I before said, we do enjoy in the Chinese market a larger proportion of the trade than any other nation; but observe who are our closest competitors in the trade-the people of the United States. Now, in the colder parts of China, the articles of manufacture most in well established that the export of tea to England cannot be increased under the present system of duties, it is not difficult to foresee that un-request are the coarser kinds of cloths, in less a new opening be found for a larger consumption of China exports in our markets, a gradual reduction must take place either in the quantity or in the prices of our imports in China until they come to a proper level. On the other hand it is beyond calculation to what extent the Chinese would purchase our woollens and cottons, were we enabled to take their produce in return, especially after having obtained the legalisation of the opium trade." He further states, that in this he is borne out by Sir John Davis, by whom his words are quoted : "It must be borne in mind that the import trade is regulated by, and depends wholly on, the export trade, and that therefore only an increase of exports can cause a corresponding increase in which articles the Americans have the greatest advantage in competing with us. There is, I believe, no duty upon the importation of tea into the United States; and I ask the House to observe the disadvantageous position in which the manufacturers of this country are consequently placed in competing with American manufacturers in the Chinese market. England imposes a duty upon tea varying from 200 per cent, up to 1,000 per cent, in exceptional the only rivals we have in that particular cases, upon the value of the article; while branch of manufacture impose no duty at all. I hold in my hand a commercial cir cular, dated the 31st December, 1847, | half, the exports of the same description from the house of Hollinshead and Tet- of goods in 1846 had fallen to 940,000l., ley, of Liverpool. They state that in and in 1847 to 888,000l.; and I am 1837-8 the exports of cotton from the afraid that we can scarcely venture to United States to Great Britain were hope that there is a better prospect for 1,165,000 bales, while in 1846-7 the ex- the year 1848. In proof of this, I may ports were 830,000 bales, and that in the allude to a return which I received this same time the quantity consumed in the morning from a gentleman who is well United States rose from 246,000 bales in known in this House, and who was Mem1837-8, to 427,000 bales in 1846-7. The ber in the late Parliament for Sandwich. circular further statesHe states that whereas in January, 1845, the exports amounted to 91,000l.; in 1846, they were 78,000l.; in 1847, they were 117,000l.; in 1848, they were 3041. "This year will be memorable in the annals of the cotton trade-it has been disastrous to all interests concerned in it. The decrease in the consumption has been without parallel; and as the case is wholly different in France and in America, the contrast affords matter for serious reflection." Now, I call attention to this circumstance for the purpose of showing that it is not unimportant to watch with vigilance in this important market of China the degree in which we may be able to supply the market by our exports. But we find that there is one very serious obstacle to any alteration in the duty on tea, and that obstacle is expressed in the sentence of the report "The revenue derived from tea in the last year amounted to 5,110,897., and although this amount of revenue cannot be permanently relied on, being founded on a consumption which has been carried to that extent by prices not remunerating to the importers, and which are therefore not likely to be continued, yet it is no doubt so important an element in the income of the country, that under present circumstances it cannot be lightly dealt with." But I find also that with regard to the shipment from Liverpool to China, the amount of exports for 1845 were 112,372,565 yards; in 1846, this had gone down to 76,035,749; and in 1847, to 56,789,486, or just one-half of what they had been two years before. if this be the case, it must of necessity follow that the exports which are to insure these imports into China, must diminish also, which of course must lead to a corresponding diminution of revenue; and, therefore, while we reported that so important an element in the revenue of the country could not be lightly dealt with, we also found that there was the strongest state of the law that amount of revenue reason to believe that under the existing cannot be permanently maintained. found it necessary to consider what the effect on the revenue would be of any change in the rate of duty. Some im We Now, I am as much alive as anybody can be to the importance of revenue considera-portant statistics were brought before us tions; but we also found on inquiry that it was by no means certainly to be concluded that five millions of revenue would, under the existing duty, continue to be received from tea. We find, as I have already stated, that since 1843 the tea trade has been a losing and not a remunerating trade. But I find that in 1842 the revenue received from tea barely exceeded four millions, and that in 1843 it did not equal four millions and a half. I have not seen the official returns for 1847; but I have some reason to believe that in that year the revenue from tea will barely have amounted, if indeed it has amounted, to quite five millions, it having in 1846 been 5,110,0001. But, as I before remarked, our trade with China was considerably diminished since 1843, for I find that while the exports of cotton cloths in the year 1844 to China were 1,464,000l., and in 1845 1,543,000l., being on the average of the two years one million and a to show, in regard to the past year, what the effect of a change in the rate of duty would be upon the revenue. They will be found at page 443 of the report. From the table there given it appears that in 1782 the duty was 66 per cent, and the quantity of pounds consumed 6,202,257. In 1784 the duty was 12l. 10s. per cent only, and the quantity of tea consumed rose to 10,150,700lbs. That rate of duty continued down to 1795, when the consumption had risen to upwards of 21,000,000lbs., the total increase in the twelve years being 350 per cent, of which, in the two first years, the increase was no less than 113 per cent. I quote this for the purpose of showing that we have some reason to believe that by a judicious change in the rate of duty some increase in the consumption of tea, and, therefore, of increase to the revenue, might be secured. I find in the evidence brought before this Committee, with regard to the quantity of tea con sumed, that in families where expense is not an object, the consumption of tea may be taken at from 12lbs. to 13 lbs. per head; in workhouses the average consumption amounts to 3 lbs. per head; for emigrants the amount is 4 lbs. 3 oz. per head; in the Navy it is 5 lbs. 4 oz., besides cocoa and other articles; in the Channel Islands the consumption averages 4lbs. 4oz. per head; in Australia there is reason to believe that the consumption is rising to 8 lbs. or 9 lbs. per head; while in the United Kingdom we find that the average consumption is not more than 1lb. 10 oz. per head, or somewhere about half the consumption allowed in workhouses. I think it cannot be contended, after these returns, that there is not a capability of increasing the demand for tea among our own population at home, provided you can bring it within the limits of their expenses, when we find that in the Australian colonies, where there is no duty on tea, the average consumption is 8 lbs. or 9 lbs. per head, while in the United Kingdom it is but 1 lb. 10 oz. per head, or only half the quantity allowed to the poor in our workhouses. Some calculations were made and presented to the Committee, showing what the effect on the revenue would be of an increased consumption of tea under a lower duty. Those who desired to see a reduction of duty wished that it should be reduced from 2s. 41d. to 1s. per lb., and they calculated the probable effects of a reduction to that amount. Supposing that the same quantity of tea were consumed as at present, the revenue at the ls. duty would be 2,300,000l. If the same sum of money continued to be expended on tea as at present and that I think of all the calculations is the most reasonable, for no one will, I think, be found to say that that is a rash mode of framing the calculation there would be an additional consumption of 24,000,000 lbs., and an increase of 1,200,000l. to the 2,300,000l., giving in the whole a revenue of 3,500,000l. as received from tea in the first year of the reduction. But into this account is also to be taken the average quantity of sugar which would be consumed for that extra consumption of tea, according to the proportion now used; and if you take 32,000 hogsheads of sugar as the additional quantity required for the 24,000,000 pounds of tea, you will, taking the lowest rate of duty, have an additional revenue from sugar of 455,000l., leaving a total of 3,962,000l. on which you may count under your exist ing trade with China. On referring to the returns for 1842, you will find that this calculation exhibits about the same amount of revenue as was received in that year from tea, and that, it should be borne in mind, was the last year in which we had a remunerative trade with that country. What guarantee have you, I would ask, that you will be able to maintain your amount of revenue from this source beyond the amount at which it stood when you had a remunerative trade? Another calculation which was brought before us, but which I will not take as the basis of my computation, as the result would be more sanguine than I am disposed to give, was this. It was stated in evidence that in the year 1844 a change took place in the mode of levying the duty on tea in the Isle of Man. As the mode of levying the duty in that island was of a very complicated nature, I will not enter into any details with regard to it; but the practical effect was to diminish the cost of tea to the consumer by 1s. 6d. in the pound. The consequence was, that while in 1844 the consumption of the island was 75,000 lbs., it increased in 1846 to 133,000 lbs., or very nearly double. Now, though I admit that it would be exceedingly rash in the Committee to have made that the basis of a computation for the whole of the United Kingdom-and I, for one, would be no party to such a proceedingstill I think that, as I am laying before the House a calculation based on principles of caution, I should not act right in closing the case without calling your attention also to this, the most recent instance which we have had, of the effect of a reduction in duty on that article. But then you may ask where are the resources to come from to purchase these 24,000,000 lbs. additional of tea, and the additional sugar which was to be used at the same time to make up the amount to the revenue? The reply is obvious. The money now spent in tea alone would, as I have said, if the duty were reduced to 1s., provide for the purchase of the additional quantity of tea; but if we imported 24,000,000lbs. additional of tea, we should have a largely increased export trade to China; and the value of these exports would go to a great extent in wages to the operative classes, and would give a great increase to the means of the labouring population for the purchase of both tea and sugar. And if you thus stimulated industry, and added to the exports and imports of the country, and to the interests of your artisans and of your shipping, you would of course stimulate the demand for other articles, not only among the necessaries but the comforts of life, and you would thus also tend to increase the receipts of the Exchequer. By that means the Exchequer, sympathising with the community, would be benefited, and the increase thus obtained, ought not to be left altogether out of consideration. But we are told by some of the witnesses that the supply of tea from China might be expected to fall short, and that therefore an increased demand from England might have the effect of raising the price in China, and the public here would not get the full benefit of the reduction. On that point we took great pains to examine witnesses at great length; and if any hon. Gentleman will turn to the index to the report under the head, " Supply of tea," he will find that we had the advantage of men of the highest experience and judgment on the subject. Among them were Mr. Fortune, a gentleman who resided for some time in China, where he was engaged in inquiries of a botanical character. We had also the advantage of examining an hon. Member of this House, who has been most intimately acquainted with the Chinese trade. The hon. Member for the borough of Ashburton (Mr. Matheson), and also my hon. Friend the Member for South Lancashire (Mr. Brown), whose knowledge of trade on this as well as on all other matters is most valuable, together with the hon. Member for Dartmouth (Mr. Moffatt), and many other eminent men of the greatest experience and knowledge on the subject. The uniform result of their evidence is, that there is not the slightest fear that any additional demand we could make on China for tea would occasion anything like a scarcity or an increase in the price of the article in that country. On the contrary, it was stated that the enormous population of that country were far greater consumers of tea than we could ever hope to become in this country-that the greater portion of the 300,000,000 of inhabitants in China were in the habit of making constant use of that beverage-and that the small increase in our demand would be felt as nothing in their market. We were also told that an increased demand for tea in China has always had the effect of producing an increased production; and that whatever failure might result in our calculation, it certainly could not arise from any dearness in China caused by an increased consump tion in this country. In China the land used for the growth of tea is most abundant, and there is every facility for the cultivation of that article, so that with any degree of increased demand there will be an increased supply. There is one article on which I acknowledge we may produce a deficiency of revenue to the Exchequer; but about this article very little was said in the Committee. My hon. Friend the Secretary of the Treasury gave us the advantage of his presence; and he very naturally directed his attention to questions of revenue. But he said very little about the diminution we were likely to occasion in the duties raised upon spirits. I was not at all astonished at the discretion and good sense exhibited in that particular by my hon. Friend. In the course of the last Session he moved for a return in connexion with this very subject, from which it appeared, that in 1841, the population being 26,700,000, they consumed no less than 24,000,000 gallons of spirits; whilst in 1845 the consumption was raised to 26,672,000 gallons; and he showed us the extent to which the population of Scotland, in many respects so very commendable for the qualities of industry, sagacity, and thrift, had, in this particular article of spirits, contributed to this result. In 1841, the population of Scotland being 2,628,957 persons, the quantity of spirits entered for consumption was 6,078,719 gallons; and in 1845 that quantity had risen to 6,525,489 gallons. I do not know to what extent the duties in Scotland may have affected that calculation; but I know, that for the whole United Kingdom, with a population of 26,700,000, the consumption of gallons of spirits was upwards of 24,000,000. All I can say is, that having (as becomes me) most special regard to Her Majesty's Exchequer, if there be one source of revenue I should see decline with unfeign. ed satisfaction, it is that which flows from the duty upon ardent spirits; and I should be exceedingly well pleased if the Chancellor of the Exchequer should have it in contemplation to make a reduction in the tea duties this Session of Parliament, to find he had calculated upon a falling-off in the duty of spirits. And however sorry I should be to hear the statement with regard to any other article, so far as the revenue is concerned, I can only say I would cheerfully go with him into Committee of Ways and Means, in order to enable him to supply the deficiency by a |