The duty charged on many American imports is very heavy, and diminishes amount by lessening consumption. I annex tabular statement of duty on imports and exports.

The imperial government has recently declared that its financial condition is sufficiently favorable to allow of a diminution of import duties. Any influences which our Government may be able to exert in this sense will of course be favorable to general trade, and it is thus only, so far as I can see, that the action of our government can benefit cominercial relations between the two countries. The duty on many articles of foreign manufacture amounts to a prohibition in the northern provinces; the object of the system being "to encourage national industry," a most mistaken policy, in this country at least, when in all the provinces agriculture suffers from want of labor, and in the Amazonian provinces the population is not sufficient to gather the natural products of the country.

A few unimportant manufactures are, by the system of high duties, protected in Rio de Janeiro, and all the northern provinces suffer in consequence. The civilizing agency of cheap comforts is thus denied, specially to the provinces of the Amazon, containing a population of perhaps 300,000, scattered through a country reaching from the mouth of the river Amazon to the eastern borders of Peru and Bolivia. Of this population perhaps 30,000 are slaves.

A considerable business is done with Peru and Bolivia in merchandise partly brought here, and partly imported with special destination by merchants established in those countries.

Difficulty of access makes the trade of Bolivia small as yet, but that with Peru is already important, and is increasing in value. No duties are charged in the eastern riverine ports of either country. By an early opportunity I will forward some statistics in regard to this trade.

I have thus furnished such information as I believe meets the views

expressed in your circular. Brazil is, however, scarcely within the terms of that circular, or of the Senate's resolution. It is not a "Spanish-American State," nor is it "in close relations of geographical contiguity" with the United States, nor would its form of government suggest any special "political friendship" with a republic. Yet will the same means which the Government may find effective to increase our commerce with other countries be equally applicable to Brazil. In none of the Spanish-American States is the feeling toward our country more kindly than it is in Brazil, and this is particularly the case as relates to the Amazonian province; the apprehension of territorial encroachment, which sometimes causes great uneasiness in States that are nearer to us, does not exist in Brazil, and the impolitic centralization of authority in Rio, under which these remote provinces suffer serious inconvenience, is often contrasted with the government of a country which is in fact as near to them as their own capital, to which they are forced to appeal in matters involving daily interests. Commercial relations do not, however, depend upon, indeed are scarcely influenced by, political sympathies. It is not to any sentiment of friendship in this or other countries that we must look for the development of commerce. Trade has but one law, which is invariable, viz., to buy in the cheapest market. We shall not be able to meet the competition of rivals until we can produce as cheaply as they can produce, and carry as cheaply as they can carry; whether the advantages of cheap labor are profitably bought, by the aggregation of a large population in a limited area, is another question, and one which it would not become me to discuss. But in answer to your permission "to make such suggestions as I may deem

useful," I will briefly add that the commercial relations between the United States and this country will be promoted-first, by any means through which the cost of our home productions may be lessened; next, by such efforts as may reduce the duties of import and export in this country; and, finally, by inducing the government of this country to abandon the idea of protective tariffs in order to devote its whole strength to agricultural development, in which its true interest lies. Whatever may be the benefit of a protective system elsewhere, it is certainly an error here; nor, indeed, is it within the range of human intelligence to administer such a system in a country of vast extent and varied production without injuring one portion for the benefit of another. Until recently all the steamers plying on the Amazon River were of British build, and this was due entirely to the fact of certain American builders having, years ago, accepted a cheap contract from the Peruvian government for boats to ply on the upper river. They soon decayed, and the result of this short-sighted policy was to exclude for many years all American-built boats from Amazonian waters.

During the last two years, however, a company, subsidized by the provincial government, has placed four American boats on the river. The novelty of their build at first caused considerable surprise, but I am happy to say they have given great satisfaction on account of their small consumption of coal and general adaptation to river navigation, in which they are far superior to boats built in Great Britain. The long enduring prejudice is at last removed, and no doubt the example of this company will be followed by others in this and neighboring provinces. The boats are of iron, and all were built by Messrs. Pusey, Jones & Co., of Wilmington, Delaware.

JAMES B. BOND,

United States Consul.

No. 311.]

No. 212.

Mr. Nelson to Mr. Fish.

LEGATION OF THE UNITED STATES,

Mexico, November 4, 1870. (Received November 25.)

SIR: In compliance with the instructions contained in the circular from the Department of State, dated the 19th of August last, I have the honor to submit the following facts and considerations respecting the present state of commercial intercourse between the United States and Mexico; the causes of the present prostrate condition of American interest here, and means which might probably be efficaciously employed by our Government to bring about a more prosperous state of affairs.

On the 1st of August, 1869, I addressed a confidential circular to all the American consuls and consular agents residing in the republic of Mexico, requesting them to furnish me with data concerning the politi cal and material condition of the States in which they respectively reside. Replies were received from most of these officers, and copies of several interesting and valuable communications were transmitted by this legation to the State Department in the closing months of 1869, and the earlier portion of the present year. I respectfully suggest that a collation of these documents will furnish data upon many of the points covered by the Senate resolution.

As the chief practical inference from so many communications, and

from my own observation, experience, and inquiries, I may state that the present commercial intercourse between the United States and Mexico is in a state of the utmost prostration and decadence. The reports of our consuls are unanimous upon this point. In this city, which is one of the largest in Spanish America, the number of American mercantile houses does not exceed two or three, and the total number of American residents is but a score or two. The same is the case in Vera Cruz, and in the principal ports of the Pacific, as well as, with greater reason, in the large cities of the interior.

The commerce of importation into this republic is almost exclusively in the hands of European merchants, chiefly English, French, and German. The large number of citizens of the Southern States of the Union who came to Mexico immediately after the rebellion, have almost all returned to the United States. The agricultural colony near Cordova, from which so much was expected, has been completely broken up and dispersed, and there is not at this moment in Mexico a single notability remaining out of the many confederate refugees. Of the few American commercial houses in Mexico, the greater part import more foreign than American goods, there being, I believe, but one house which deals exclusively in articles of American manufacture that is to say, in arms and ammunition. On the Pacific coast our commerce via San Francisco is almost limited to the vessels of the Pacific Mail Steamship Company, which complains of a loss of trade, and is even said to be running at a loss. The importations by this line are chiefly confined to arms, and agricultural and mining implements, with small quantities of hardware and Chinese goods. The causes of this low state of American commerce in Mexico are but too easily explained. They may be summed up as follows:

1st. The force of habit; the Europeans having preceded us in estab lishing commercial relations here.

2d. The low rate of interest which European houses pay for their borrowed capital, contrasting with that of the United States in the proportion of from five to ten per centum.

3d. The fact that European manufacturers of cotton and fancy goods invariably consult the Mexican taste, thus enabling them to make little account of durability of material, and successfully to compete with American articles of stronger texture, but of subdued colors.

4th. The chronic insecurity of life and property, which has exerted and still exerts a fatal influence upon all foreign capital in the country, and whose effect on Americans has been absolutely to preclude its introduction.

5th. The entire want of railroad and telegraphic communication between the two countries along our 1,500 miles of frontier.

In respect to the proper remedies which might be employed by the Government of the United States to enable Americans gradually to assume that commercial importance in Mexico to which our proximity and political sympathies entitle us, they may be summed up, in general, as being those measures which will most effectually operate for the removal or neutralization of these five causes.

Undoubtedly, under favorable circumstances, something may be accomplished diplomatically to place the commerce of the United States upon a more favorable footing as toward the Mexican revenue system. By the continuance of the wise policy of giving moral aid and counte nance to the present liberal and patriotic government of Mexico, we shall also contribute to the rapid development of that energetic protection to life and property which is of such urgent necessity, and which this gov

ernment is doing all in its power to establish. In the line of active promotion of American interests in Mexico, I know of nothing more important to be consulted than the facility and rapidity of intercommunication by means of railway and steamship lines and telegraphs, both as between the two countries, and as within the extensive Mexican territories where the almost total absence of good means of communication is proverbial. However desirable American colonization may be to Mexico and to our interests, it cannot be effectually promoted in any other way. The construction of railways, then, through the State of Texas and the Territories of New Mexico and Arizona, to the Mexican frontier, is an object of the first importance for the interests to which this inquiry is directed. When such roads once exist to the frontier the Mexican government will undoubtedly make great efforts to promote their extension through the vast States, fabulously rich in mines and in agricultural wealth, of her northern zone. The unfriendly legislation which, under the name of the zona libre, and other burdensome clogs upon our commerce, would then naturally disappear. The growing prosperity of our Southern States, and especially the gratifying progress of the port of New Orleans, is destined to exert a speedy and beneficial influence upon our commerce with Mexico. It is worthy of inquiry whether our Government might not properly do something in aid of the reëstablishment of lines of steamships from New Orleans to the Mexican ports of the Gulf.

Finally, everything which promotes a knowledge in detail of the vast but undeveloped resources of the several States of Mexico will inevitably exert a powerful influence for good in the desired direction. The speedy construction of the Tehuantepec Railway will be an inestimable boon to the increasing community of interests between the two republics. The survey about to be made of that Isthmus by an expedition under the auspices of the American Navy Department, will, if successful in its object of establishing the feasibility of interoceanic navigation, do more than anything else that could be suggested to excite in our commercial houses that interest and curiosity which are the precursors of enterprise. Beside giving the widest publicity to the results of that survey, if favorable, might not our Government usefully undertake the scientific survey of other portions of Mexican territory contiguous to our own, with a view to other international public works?

The suggestion made in the closing paragraphs of the able preliminary report on this subject of the Department of State, concerning a congressional appropriation to employ statisticians of ability to collect and collate information upon this subject, seems to me eminently conducive to the attainment of important results, and, in case of its adoption, I would suggest that one or more persons be detailed to the special study of the subject upon Mexican soil. I have addressed a note to Mr. Romero, the secretary of the treasury, requesting him to furnish me certain information and statistics upon several of the matters involved in this inquiry, which I hope to be able to communicate to the State Department by the next steamer.

THOMAS H. NELSON.

IV. MISCELLANEOUS CORRESPONDENCE RELATING TO FOR

EIGN AFFAIRS.

No. 1394]

AUSTRIA.

No. 213.

Mr. Jay to Mr. Fish.

UNITED STATES LEGATION,

Vienna, August 3, 1870. (Received September 14.)

SIR: I have the honor to acknowledge the Department dispatch No. 51, dated the 5th of July, from Mr. Davis, Assistant Secretary, and your dispatch No. 53, dated the 11th of July, both in reference to the cable messages sent by me on the subject of Mr. Bancroft's dispatch on the internal affairs of Austria.

*

After the treaty of Prague, in 1866, Austria, thenceforth excluded from Germany, accepted the situation adopted under de Beust, a policy of free constitutional government, and devoted herself to the work of reconstruction. Hungary was first reconciled, and the recent bitter feuds were replaced by warm devotion, and Andrapy, proscribed in 1849, is to-day its chief minister. In Cisleitha the work is still progressing under difficulties of which the Department has been steadily advised, and the rivalry between Prussia and Austria *

had not ceased with Sadowa. The non-execution of the fourth and fifth articles of the treaty of Prague had not tended to establish perfect confidence; the memory of the Count de Bismarck's declaration to the Austrian ambassador that Austria was an eastern and not a western power, and that her capital was Pesth, and not Vienna, was not forgotton; the disclosure, by General la Marmora in the Italian Chambers, of the letter of the Prussian ambassador, in June 1866, declaring that it was necessary to "strike the Austrian power to the heart," had made a profound impression as coming from their ancient ally, and reminders were constantly supplied by the German press of the intent, still cherished under color of German nationality, to strip Austria of her provinces wherever Germans might be found, however few in number, from her northern border to the Adriatic Sea. When Mr. Bancroft's dispatch appeared, dated at Berlin, with a reference to its colored map to prove Pesth "the exact central point of the totality of the whole empire," with hints of the coming superiority of Pesth over Vienna, and with its intimation that, unless the Austrian cabinet should be governed by the wishes of its German subjects, it might lose its German-Austrian provinces, as it lost Venice and Milan, it is not difficult to understand that such a document, at a critical moment, appearing with a color of American authority, was cal culated to surprise rather than to charm the cabinet at Vienna. I say a critical moment, for you will remember that, at the date of Mr. Bancroft's dispatch, when, to give an idea of the existing state of Austria,