Sir,

In reference to the temporary employment of Commodore Shufeldt in the naval service of China, I was informed by Department instruction number 132 that it had come to your knowledge that some of the Legation of Peking, and notably the French, were unwilling that such an arrangement should be made and had used their influence with the Foreign Office to prevent it. The same instruction authorized and requested me, in case I found that these had been diplomatic intervention here, to counteract, unofficially, any misrepresentations as to the position and purposes of our Government which may have been made etc, etc.
In response to this instruction I have the honor to inform the Department that after cautious and yet thorough inquiry I am satisfied that no action upon this subject has been taken by any of Legations here with the Foreign Office. There has beyond a question been much intriguing and plotting hostile to the employment of Commodore Shufeldt in the Chinese naval service, but the issue of this had been before the Viceroy Li at Tientsin and not here.
Under the existing—system the Central Government of China has little or nothing to do with its naval marine. There is an annual appropriation for “Coast Defense” as it is called. This is decided by the Government between the Viceroy at Tientsin and Nanking who expend it, according to their own discretion on the construction, repair, and armament of land fortifications, in building or purchasing vessels of war, the purchase of cannon, small arms, or ammunition, in recruiting of sailors and soldiers, or in the employment of foreign naval or military officers. Contracts for the services of foreigners are invariably made between the parties concerned and these Viceroys. Only the vaguest and most general report is made upon the expenditure of the “Coast Defense” allowance to the Throne, and it is exceedingly doubtful whether any Minister of Foreign Office could tell today over the number of vessels of war which fly the Chinese flag. it is as though, in the United States, all naval matters were relegated by the General Government, to say, the Governors of New York and California, who contented themselves with reporting annually the most general facts connected with the expenditure by them of our naval appropriations.
The Department will readily see that, under such a system, any business connected with the engagement of Commodore Shufeldt in the Chinese naval service would be conducted with the Viceroy at Tientsin, and that all efforts to prevent such engagement would also center there. The Foreign Office has, in the past, invariably disclaimed all connection with or responsibility for contacts of the kind in question, and would doubtless decline to go further than to report what I might say to Viceroy Li.
It is true that, were the business to be entered upon officially, this disclaimer of responsibility on the part of the Central Government might justly be refused acceptance. But there are, in my opinion, important reasons affecting public interests for deferring any action upon this business for the present.
As the Department was informed in my despatch number 60 of the 4th instant, the Chinese Government has expressed its readiness to afford assistance to the United States in an effort to establish treaty relations with Corea.
On the part of our Government this business has been confided to Commodore Shufeldt, and Whatever aid China may see fit to render will be through Viceroy Li as its agent. It is therefore enumerately desirable that nothing be done which may in any way risk the loss to us of the treaty-cooperation of that influential and sensitive official.
In view of the grave interests at stake, while believing that the Viceroy has been influenced by outside parties to a gross breach of good faith toward Commodore Shufeldt, and that this Government should at a fitting moment be made to understand that the United States resorts the treatment which a distinguished officer of our naval services has received at the hands of the Viceroy as a reflection upon its own dignity, I have still decided in the exercise of that discretion which no doubt the Department intended to repose in me, to defer any action upon the matter at issue for the moment.
It is proper that I should say that the decision has been reached after full consideration with Commodore Shufeldt, who is now in Peking, to whom this despatch has been submitted, and who agrees in its conclusions.

I beg the approval of the Department

I have the honor to be, Sir, your obedient servant.
Chester Holcombe
With three inclosures
Tientsin, China