Kerosene importers clash in Joseon

Jemulpo (modern Incheon) in the late 19th century Robert Neff Collection

By Robert Neff

In the early 1880s, the first "products of Western civilization" that really appealed to Korean consumers were beer, matches and kerosene. During the 19th century, kerosene was the United States' number one export item to the Korean Peninsula. In 1885, more than 162,400 gallons (614,750 liters) of American kerosene arrived in Jemulpo (modern Incheon). Considering the average Korean household purchased relatively small amounts of the oil, the main consumers ― at least in the beginning ― may have been the Korean government and the foreign community.

By 1890, Russian oil appeared on the market ― mainly through Jemulpo. Although the Russian oil was cheaper, it was not very popular because of its "bad packing." According to Walter C. Hillier, the British consul, "The [kerosene] tins leak, and the cases are far too flimsy to stand the rough handling to which they are necessarily subjected in transport into the interior."

In 1896, the amount of Russian kerosene exported into Korea jumped. The Russian exporters had apparently improved their packaging and sold their product for about 20 cents a case cheaper than the American kerosene. However, according to John N. Jordan, the British consul, "Its cheapness scarcely makes up for its inferior quality." Despite the Korean consumers' preference for American Standard Oil, they often ended up purchasing Russian oil through deceit.

Unscrupulous exporters in Japan bought the Russian oil ― at its much cheaper price ― and repackaged "in the once used tins and cases of the American product." These tins were then exported to Korea and sold to unsuspecting Korean consumers.

The Japanese exporters also disguised their own inferior domestic kerosene in the same manner or in counterfeit or spurious cases shoddily marked as being Standard Oil. In 1896, some 6,500 gallons (24,600 liters) were exported to Korea in this manner. Apparently, despite being in American tins and counterfeit packaging, they were declared to be Japanese kerosene ― perhaps in a ploy to avoid the higher customs' fees.

Jemulpo harbor in the early 20th century Robert Neff Collection

According to Jordan, "this is the first appearance of Japanese oil on the import list, but as the natural supply of kerosene in Japan is supposed to be very limited, and is not likely for a long time to suffice for home consumption, there is little danger of competition from that quarter."

This greatly annoyed Townsend & Co., the American trading company in Jemulpo that served as the Standard Oil Company's agent in Korea but, as the American consul general noted, "in the absence of anything like a law of trademarks or against adulteration, it was very difficult do anything to prevent this course."

Townsend & Co. also had to contend with local politics. When the company announced that it was going to build extensive warehouses in the port to store the oil, it was met with strong opposition by the municipality unwilling to allow "the construction of supposedly dangerous buildings within the limits of the general foreign settlement." The company had no choice but to construct two warehouses (able to store 50,000 cases of oil) on Wolmi Island which "necessitated considerable handling of cases intended for distribution in Jemulpo." This may have cut some of the company's profit but had no impact on demand ― the following year (1897), it imported "upwards of 1,000,000 gallons" (3,785,410 liters) of kerosene.

While Townsend & Co., was enjoying great success, the importers of Russian kerosene were suffering. According to Horace N. Allen, the American minister and consul general to Korea:

"Russian oil is not well liked by the [Koreans], for it contains so much paraffin as to be too thick for acceptable use in the cold winter weather when it is most in demand, while it gives off so much smoke as to be very injurious to the light-colored silk or cotton garments worn by the people, as well as to the white papered walls of the houses. It also is objectionable because of its strong odor. Russian kerosene would have to be sold for a very low price to make it a serious competitor of the American product."

Carrying goods to the warehouses in Jemulpo in the early 20th century Robert Neff Collection

The Japanese, despite Jordan's earlier prediction that they would not be able to compete very long, continued to challenge ― in a small way ― the American dominance of Korea's kerosene market. In 1898, the Japanese exporters continued to package their kerosene in used Standard Oil tins and sold it for much cheaper than the genuine product. A year later, in an attempt to woo Korean customers, the Japanese improved the quality of their product and cut the price even more. They had limited success, according to British Vice Consul John H. Gubbins:

At Chinnampo (the port that served Pyongyang), "the recent importations of this oil have not been successful, a considerable quantity having been re-exported from that port during last year, the low price at which it was offered failed to attract purchasers."

In 1897, a British merchant in Jemulpo introduced a new competitor ― Sumatra oil shipped through Shanghai. It was sold for 20-30 cents cheaper than the American kerosene but was "smoky and of inferior quality."

Undaunted, the British company was determined to challenge the American dominance of the market ― even trying to use political influence. It acquired a site near the Seoul-Chemulpo Railway "with a water frontage deep enough to accommodate a small tank steamer" and intended on building a large tank so that the oil could "be conveyed in bulk to Seoul for distribution into the interior." Allen, a member of the municipal council, refused to approve and the proposal fell through.

Allen later remarked he was successful in this initial attempt, but there was nothing to stop the company ― or a similar one ― from buying land outside of the settlement and erecting storage tanks to take advantage of the close proximity to the railroad.

Not all threats to Townsend & Co., came from foreign competitors ― some threats were domestic; in the form of American missionaries.

Fusan (modern Busan) harbor in the early 20th century Courtesy of Diane Nars Collection

In the winter of 1898/99, hard feelings arose in the American community when it was discovered that Horace Underwood was trying to save money by ordering his own goods (and possibly selling them to his fellow missionaries) instead of going through Townsend & Co. According to Allen, Townsend was "so angered by this missionary agency business, and especially Underwood's attempts to get out a cargo of kerosene, coal, etc., that he wrote in such a strong manner to his mother as to cause her to cease her very considerable annual subscription to the cause of the missions."

Despite the threats, Townsend & Co. persevered. In 1901, Russian and Sumatra oil were absent from the trade reports and Japanese kerosene fell from 222,730 gallons (843,125 liters) in 1900 to 19,260 gallons (72,907 liters). The American company clearly dominated. In 1901, it imported 2,463,630 gallons (9,325,855 liters) and built an oil storage facility (with a capacity of 50,000 cases) in Busan ― "the centre of the Japanese trade" in Korea.

The British vice consul predicted that the market for Standard Oil's kerosene would grow even larger once the railroad was complete from Busan to Seoul. According to him, "The chief fact in preventing the use of kerosene oil becoming general is the prohibitive cost of conveying it into the interior under present conditions, and the construction of railways will effect a revolution in this industry as in others."

According to his biographer, "There is no question that Standard Oil and its kerosene imports" and Walter Townsend's "'oil for the lamps of Korea's' marketing" helped make Townsend one of the most successful American businessmen on the peninsula in the late 19th and early 20th centuries. His only real contender was Leigh Smith J. Hunt, who owned the concession to the gold mines in northern Korea.

Robert Neff has authored and co-authored several books, including Letters from Joseon, Korea Through Western Eyes and Brief Encounters.