Old China Trade
The Old China Trade refers to the early commerce between the Qing Empire and the United States under the Canton System, spanning from shortly after the end of the American Revolutionary War in 1783 to the Treaty of Wanghsia in 1844. The Old China Trade represented the beginning of relations between the United States and East Asia, including eventually U.S.–China relations. The Maritime Fur Trade was a major aspect of the Old China Trade.
- 1 Origins
- 2 Growth
- 3 The Development of the Canton System
- 4 American diplomacy in China
- 5 Denouement
- 6 Legacy of the Old China Trade in Salem, Massachusetts
- 7 Noted China Trade merchants
- 8 See also
- 9 References
- 10 Further Reading
- 11 External links
- 12 Image Gallery, Legacy of the Old China Trade in Salem, Massachusetts
Anglo-American hostilities ceased in 1783 following the Second Treaty of Paris that ended the American Revolutionary War and subsequently freed American trade from British control. At the time, increased global demand for tea was one of the primary reasons for a shortage of silver; this was the only currency that the Chinese, sole producers of the commodity at the time, would accept in payment. The East India Company (EIC), monopoly suppliers of tea to the English market, got around the problem by indirect sales of opium (grown on their plantations in India) to the Chinese, the proceeds from which they used to pay for tea.
The Americans meanwhile, also needed silver to finance their burgeoning international trade in furs, timber and other commodities. They too looked to the Chinese market as a source of hard currency based on their monopoly of the opium trade in Turkey. The man who would become America's first consul in China, Bostonian and former Continental Army officer Samuel Shaw (1754–1794) arrived in the port of Canton (now Guangzhou) in 1784 aboard the converted privateer Empress of China. The "Chinese Queen", as the vessel was known, under the command of Captain John Green, carried a cargo of silver specie and ginseng for trade. In Canton, the Americans encountered many European nations already trading under the Canton System, including the English, Dutch, French, and Danish. Shaw subsequently negotiated the sale of the Empress's cargo and earned a substantial profit. As well as symbolizing a breach of the British East India Company’s tea monopoly, successful and lucrative voyage of the Empress inspired other American merchants to follow suit with the desire to enter a new market with great potential for profit.
Two years after the voyage of the Empress, Shaw set up the firm of Shaw & Randall to advise American firms unfamiliar with trade in the Far East. Boston Brahmin Thomas Handasyd Perkins of Perkins & Co., the dominant American presence in the Turkish opium business, along with one of his partners and his 16 year-old nephew John Perkins Cushing, subsequently opened operations in Canton, where Russell & Co. had become the most important American opium dealer. The founders of Russell & Co., Samuel Russell and Philip Ammedon, had set up in the Chinese city in 1808, buying opium at auction from the EIC in Bombay, which they then shipped clandestinely to Canton on the south coast of China. By 1827 Russell and Co. has become the largest American opium dealer in China, competing in the market alongside British firms including Jardine, Matheson & Co. and Dent & Co..
Trade with China, originally an enterprise of seemingly limited prospects involving significant risk instead turned out to be extremely lucrative. American traders, now with a stable foothold in Canton, were eager to sell their goods to China; the extravagant mandarins in China, in turn, were excited at the idea of buying such goods. The first item that tended to sell in China was Spanish bullion: American traders would devote large sums of money to buying and amassing large quantities of the currency for export to China. Bullion was primarily used to complement the less profitable American goods such as cheese, grain, and rum. Use of bullion eventually became considerable with over $62 million worth of specie traded to China between 1805 and 1825. This practice, however, gradually declined after 1815, when American merchants began to participate in “chain trade” routes —the buying and selling of goods en route to Canton. The second major —and by far the most lucrative— American export to China was ginseng. Hailed by the Chinese among other cultures, as shown by the genus' Latinate scientific name Panax, as a panacea, the most potent and therefore most demanded type of ginseng, aralia quinquefolia, grew in Manchuria and the Appalachian Mountains. Transported from the interiors of Pennsylvania and Virginia to Philadelphia, New York, or Boston, ginseng was then shipped to China and sold for up to 250 times its weight in silver. Furs were the third-most lucrative American export to China. Searching for another type of item that could be sold to the Chinese aside from specie and ginseng, Americans soon found that the mandarins had a taste for sea otter pelts, which could be inexpensively purchased from the Indians of the northwest coast of America and shipped to Canton. The Chinese mandarins’ desire for bullion, ginseng, and furs was the primary impetus for America’s initiation of trade with China. The return of the Empress of China, which had carried all three commodities, and her by now rich crew to Boston in 1785 inspired other Americans to make similar voyages. However, different reasons emerged for maintaining trade with Chinas.
There had always been a general American desire for foreign and sometimes exotic wares, and, with the British East India Company no longer the dominant force in American trade, the job of satisfying this demand fell to American merchants. Therefore, when the Empress returned home, she brought with her a large stock of outlandish Chinese goods, which her owners sold for a significant profit of $30,000—a 25% gain. Other American merchants did not take long to realize that, while selling American specie, ginseng, and fur to the Chinese mandarins was undoubtedly profitable, selling Chinese goods in America would be considerably more so. Further motivation came from the knowledge that China, as a whole, had a mercantilist-like attitude towards foreign commerce; they tended to resist the importation of foreign goods because of a mixture of Confucian doctrine, which deprecated trade, and the underlying ethnocentrism felt by the Chinese —they did not need to actively search for trade because the inferior white "barbarian" states would instinctively bring it to them as a form of tribute. Because of these factors, American traders began to focus their funds on acquiring Chinese goods—a practice that the Chinese were more willing to adopt—rather than on purchasing those of America. What resulted was the flooding of Chinese teas, cottons, silks, rhubarb, cassia, nankeens (durable, yellow cloth), floor-matting, lacquerware, fans, furniture, and porcelains, into America, to the extent that even those of poor social classes possessed some Chinese items—perhaps a painting of Canton harbor or a pair of trousers made out of nankeen cloth.
The Development of the Canton System
The Co-Hong Monopoly and Supercargoes
Qing officials confined all foreign trade to Canton and regulated it through the use of merchants known as the cohong. This group owned a licensed monopoly on trade with foreigners and served as trading intermediaries accountable for their behavior and cargoes. Relations between the cohong and the foreign merchants were cordial and very peaceful, as both parties valued their reputations and had vested interests in preventing the disruption of trade. They cohong reviewed the cargo of each ship and collected tariffs that were then passed onto the hoppo (customs supervisor) and the government. The cohong were at the mercy of the government’s demands for revenue, and they had to add costs to the foreign merchants, in order to extract extra money for bribes to please the officials; although Qing Dynasty court officials did not actively supervise foreign trade China's government treasury reaped the benefits of tariff revenues. Additionally, each foreign vessel had to contract a comprador responsible for supplying the ship with provisions and servicing the factories on shore.
Before the rise of four American trading houses in the 1820s that controlled seven eighths of the China trade by 1825, Perkins and Company; Jones Oakford and Company; Archer; and T.H. Smith, the American trade was conducted through the use of supercargoes. Each American ship had a supercargo who acted as the commercial agent responsible for the purchases of Chinese goods. He had to arrive and leave on his vessel. It was not until 1800 that supercargoes began to establish themselves as resident agents in Canton. These agents either served trading houses or operated off of commissions from other private merchants’ transactions. Upon their emergence, large trading houses, greater capitalization, and higher volumes of trade became possible.
Finding Mediums of Exchange
One of the largest problems faced by foreign traders in Canton was finding a reliable medium of exchange that would enable sustainable trade with the Chinese. The Chinese were always willing to accept bullion, in exchange for tea and other products. This was because the Chinese were fairly self-sufficient and did not have a large desire for foreign goods. Specie was very expensive and difficult to acquire considering that the supply coming from South America fluctuated and it required a great deal of goods to attain through a trade. The British could not afford to sustain high-level trading in specie, and they were eventually forced to turn to opium from India. Beginning in 1767 and rapidly expanding through the early 1800s, opium was illegally traded for specie with the Chinese and then reinvested in tea for importation to Great Britain.
The Americans had less difficulty finding a variety of different products to barter for tea. The Empress of China and the following early vessels were able to use ginseng and some specie to secure tea. Yet, the market for ginseng was rather small, so the Americans began trading furs with Indian tribes in the American Northwest that were in turn traded for specie in Canton which was then used to purchase tea. From 1790-1812 supplies of furs and then sealskins were depleted and new products had to be found as demand also waned. In the Pacific Islands, merchants evaded cannibals and traded with natives to get sandalwood and sea slugs that could be traded for specie. But those items soon ran their course, and by 1814 specie had risen to nearly 70% of total American exports. In the 1820s, they attempted to compete with the British opium trade that monopolized the Indian crops by trading for Turkish opium. However, this trade only ever constituted a small fraction of the overall American trade.
The innovation of the British credit system and issuance of banking bills allowed the American traders to clear their debts with co-hong merchants and gradually substitute their cargoes away from carrying specie and more towards domestically manufactured items. The Americans could then later pay off the principal and interest on their loans to the British banks. From 1830-50, faster and larger tea clippers were introduced, thereby replacing the earlier, smaller privateering vessels from the American Revolution. As a result, Americans could achieve greater scale with the combination of tea clippers and British credit. Tea could be transported to American markets in less time and with greater freshness, translating into higher profits. By 1834, tea accounted for over 80% of the American trade from China.
American diplomacy in China
The American trade in Canton existed primarily through private traders and without the supervision and supporting authority of the United States government. Soon after 1784, an American consul was appointed in Canton and functioned as a reporting agent on trade to the U.S. government. The consul was not recognized by the Chinese authorities or the hoppo, and was not allowed to fly the American flag over its factory until well after 1799. The Americans had to trade with the Chinese as subordinates instead of equals and use the cohong for any and all demands. Consequently, the Americans did not have the leverage to raise political or legal protests and had to submit themselves to the Chinese justice system that believed in a “life for a life” and holding groups accountable for the actions of individuals. The chief concern of foreign traders was preventing the Chinese from closing trade, as they could threaten to do over legal disputes.
At the end of the First Opium War in 1842, Britain and China signed the Treaty of Nanking, which effectively overthrew the original mercantilist system and forced open the ports of Canton, Amoy (Xiamen), Foochow (Fuzhou), Ningpo (Ningbo), and Shanghai to British trading. Seeing that Britain could easily eliminate foreign competition in China with its new privileges and considerable trading prowess, Americans found the need to reestablish their diplomatic relations and commercial equality in China. For the previous fifty-nine years, Americans had been interacting with China merely through their business transactions, without government-to-government communication. As a result, the administration of President John Tyler sent the commissioner Caleb Cushing to negotiate a treaty in which America would receive the same privileges as Britain. Cushing, in the Treaty of Wanghsia in 1844, not only achieved this goal but also won the right of extraterritoriality, which meant that Americans accused of crimes in China were to be tried by American courts only. This treaty was monumental in that it laid the foundation for a more extensive and regulated American trade with China; American ships would no longer make the sporadic—and somewhat reckless—voyages to China so characteristic of the Old China trade.
Legacy of the Old China Trade in Salem, Massachusetts
In Salem, Massachusetts there are important examples of American colonial architecture and Federal architecture from the Old China Trade in two historic districts, Chestnut Street District, part of the Samuel McIntire Historic District containing 407 buildings and the Salem Maritime National Historic Site, consisting of 12 historic structures and about 9 acres (3.6 ha) of land along the waterfront in Salem, Massachusetts.
Noted China Trade merchants
- William Henry Aspinwall
- George Cabot
- John Perkins Cushing
- Elias Hasket Derby
- Fanning & Coles
- John Murray Forbes
- Robert Bennet Forbes
- Charles W. King
- Abiel Abbot Low
- Gideon Nye
- Joseph Peabody
- Thomas Handasyd Perkins
- Russell Sturgis
- John Renshaw Thomson
- Israel Thorndike
- William Shepard Wetmore
- Foreign relations of Imperial China
- History of the west coast of North America
- Paul Jones (1843 ship)
- Coe, Andrew (2009). Chop Suey: A Cultural History of Chinese Food in the United States. Oxford University Press, USA. ISBN 9780199758517.
- Dulles, Foster Rhea (1930). The Old China Trade. Boston: Houghton Mifflin.
- Forbes, Robert Bennet (1844). Remarks on China and the China Trade. Boston: Samuel N. Dickinson, printer.
- Dudden, Arthur Power. The American Pacific: From the Old China Trade to the Present. New York: Oxford University Press, 1992.
- Goldstein, Jonathan. Philadelphia and the China Trade, 1682–1846: Commercial, Cultural, and Attitudinal Effects. Philadelphia: Pennsylvania State University Press, 1978.
- Lee, Jean Gordon. Philadelphians and the China Trade, 1784–1844. Philadelphia: Philadelphia Museum of Art, 1984.