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Commercial break: the first American trade mission to China

The seeds of the now all-important US-China trade relationship were sown 230 years ago, when a small ship set sail from New York en route to Canton, writes Stuart Heaver

 

Next Saturday marks the 230th anniversary of a small ship setting sail from New York. It was the 52nd birthday of George Washington, the man who five years later would become the first president of the United States, and as that little ship set off down the East River, past a 13-gun salute, it set in motion a commercial relationship that is now the most critical in the global economy.

The Empress of China was bound for Canton (Guangzhou) and the first direct contact between America and China. She was to spark a frenzy of maritime trade between the two nations.

These days, every nuance that might represent a commercial or geopolitical change in the relationship between the US and China is eagerly reported by the world's media, though on that chilly Sunday morning in 1784, there was no relationship at all. And over the course of more than two centuries, while the scale of US-China trade has burgeoned beyond any 18th-century imagination - the total trade in goods and services between the US and China stood at US$539 billion in 2011 - the legacies from those early days remain and some of the characteristics are surprisingly similar.

This historic voyage was not inspired by diplomacy or naval prowess, however, but by Americans' love of tea.

When Captain John Green, a tough US Navy veteran, ordered his crew to slip from the quay and set sail, the infant United States had been an independent nation for only a matter of months. The Treaty of Paris that concluded the revolutionary war with Britain the previous September meant Americans were no longer obliged to rely on the British East India Company for access to tea and other Chinese commodities. The ambitious young nation was desperate to recover from the economic ravages of war and forge trading links with the Middle Kingdom.

The Empress of China was a three-masted, square-rigged sailing ship, 104 feet long with a beam of 28.4 feet, making her dimensions comparable to a modern-day Star Ferry. Rather than this being a brief crossing of Victoria Harbour though, the ship was to be home to 42 men - including Samuel Shaw, the agent responsible for all commercial transactions - for more than six months. She was to undertake a voyage of 18,000 nautical miles into unfamiliar and potentially treacherous waters with only the wind to power her.

The vessel was commissioned by congressman Robert Morris. Known as the "financier of the revolution", Morris was one of the nation's most revered merchants and statesmen. This was a national mission as much as it was a private commercial enterprise and crowds cheered the ship on its way. Its outbound cargo included 32 tonnes of lead, 50 tonnes of cordage, 500 yards of woollen cloth, 12 casks of spirits, a box of furs (mainly beaver), US$20,000 in Spanish silver coins and nearly 30 tonnes of ginseng.

After crossing the Atlantic via the Cape Verde islands and rounding the Cape of Good Hope, the Empress was fortunate to meet two French warships off the coast of Java. Green was more than happy to accept their offer of an armed escort through the pirate-infested waters of the South China Sea to Macau.

"The representatives of the newest country in the world were about to come face to face with those of one of the oldest. Americans were finally entering the Middle Kingdom," is how Eric Jay Dolin describes their arrival in the Pearl River estuary in his hugely engaging book When America First Met China, which has recently been translated into Chinese.

Canton merchants were not sure what to make of their new trading partners and referred to them as the "new people" or, in reference to their national flag, "the flowery flag devils". The pioneering entrepreneurs from New York were quite different in style to the stuffy, bureaucratic and adversarial British.

"The relationship between the Americans and the Chinese remained more collegial and less combative," says Dolin, an athletic-looking man who grew up near the coasts of New York and Connecticut.

Shaw found little difficulty in conducting business with the hong merchants and the ship was homeward bound by December 28 with a cargo of 700 chests of bohea tea, 100 chests of hyson tea, 20,000 pairs of nankeen trousers and a large selection of porcelain. At noon on May 11, 1785, after an absence of 15 months - fewer than five of which were spent on Chinese soil - and having logged a total of 32,458 nautical miles, the Empress of China anchored in the East River. She was greeted with another 13-gun salute - one for each of the states that were then united - mass press hysteria and universal accolades.

Her safe return and the healthy profit obtained from her cargo were the catalyst for China trade to develop in ports along America's eastern seaboard. Between 1784 and 1833, there were to be at least 1,352 officially acknowledged visits by American ships to China.

Trade with China became a national priority and Chinese products became common in American society. Tea had been an American obsession since the 1740s; Washington ordered his first set of Chinese porcelain from his London agent in 1755; and fashionable Americans coveted all things Chinese.

"From the sailing of the Empress of China through to the late 1830s, the American China trade flooded the US with goods that became woven into the fabric of American life," says Dolin.

The trade, though minuscule by modern standards, made merchants millionaires almost overnight and their surplus capital was invested in the nation's infrastructure, including banks and railroads. Ports such as New York, Salem and Boston thrived on the China trade and founded on it were wealthy dynasties such as the Astors and the Forbes, who built expansive mansions and whose descendants are still represented among the elite of US society. Current US Secretary of State John Forbes Kerry is one example.

A visit to the towns and cities dotted around Massachusetts Bay reveals some of that legacy. Tourists can follow the China Trade Trail to historic sites, museums and mansions, the most impressive of which is the Forbes House Museum, near Boston, an imposing Greek revival-style mansion. The house was built in 1833 for Margaret Perkins Forbes with money earned by Margaret's three sons at the family firm, Perkins & Co, the trading house founded in Canton in 1803 by their uncle, Colonel Thomas Handasyd Perkins.

"Our museum is a testament to the entrepreneurialism and determination of the Forbes family," says executive director Robin Tagliaferri. "The story of the China trade is the story of American entrepreneurialism.

"I am also inspired by the exquisite works of art produced by the Chinese for the West. They are the most beautiful products, and I never tire of learning about them or gazing upon them," she says from the museum, which houses a vast inventory of artefacts from the era.

So to what extent were cities such as Boston built on America's early trading relationship with China?

"Our museum founder, Henry Ashton Crosby Forbes, was always quite clear about the importance of the China trade to ports in Boston, New York and, to a certain extent, Newport and Providence, Rhode Island. Fortunes created in the China trade permeated every financial and economic institution in Boston," Tagliaferri says emphatically.

Gazing down from a wall of the museum is the stately portrait of Howqua, the wealthiest of the hong merchants engaged by the Qing government to supervise the Canton trade. Howqua seemed to develop an affection for the Forbes/Perkins family that demonstrated a bond that extended beyond commercial matters.

"Howqua and the Forbes family became great friends … The museum owns Howqua's coral hat pin [which signified] his rank in Chinese government," says Tagliaferri.

It was the Forbes family who invited Howqua to invest in the American railroad system, making him the first Chinese investor in US industry.

Within the elegant confines of the museum it would be easy to idealise that early relationship between the Americans and the Chinese, but not every consequence was positive.

One little-recognised effect of the relationship was the devastating impact on the environment. Such was the fervour to secure products that would sell in Canton, sea otters and seals were hunted in vast numbers for their fur, sandalwood forests were obliterated and fleets of small boats harvested vast quantities of sea cucumber.

Dolin, an environmental scientist by training, authored the 2010 bestselling book Fur, Fortune and Empire, about the history of the American fur trade.

"I hadn't known about this before working on the book and I thought it was fascinating. Sea otters and seals were devastated, not only by the China trade, but also by the trade in their skins that occurred in many other countries," says Dolin, who explains that it was the Chinese appetite for fur that opened up the western seaboard of the US to European settlement, and their demand for sandalwood that attracted merchants to Hawaii, where entire forests were flattened. "I have been told that it is pretty hard to find a mature sandalwood tree in Hawaii, for example. And many fur seal populations are still in an endangered or threatened status."

Another problem with the early commercial relationship between China and the US was the reason behind the environmental damage being inflicted in the first place. As a young nation, its silver reserves were limited, and because the US had a serious balance-of-payments problem, goods China wanted to acquire had to be found at almost any cost. Trade imbalance was as much a concern in the nascent days of the US' commercial relationship with the Middle Kingdom as it is some 23 decades later.

As many Hongkongers will be aware, the British solution to its balance-of-trade crisis was large-scale illegal opium trading, which led to war with China and was a major driver in the establishment of colonial Hong Kong. The Americans were not averse to illegal opium trading, either, though not on the same scale as the British, and companies such as Perkins & Co established links with opium trading houses in Turkey with an eye on the Chinese consumer.

Tagliaferri acknowledges the important role opium played in the Forbes family story. She produces a ledger extract dated 1813 showing the magnitude of the drugs trade undertaken by Perkins & Co.

The US trading deficit with China now exceeds US$300 billion and, while no one is suggesting that the US sanction illegal narcotics sales to China or hunt down a native species to near extinction to bolster the flagging statistics, the same tensions that gave rise to those solutions have arisen again.

The Economic Policy Institute, a non-profit American think tank, has estimated that the growing trade deficit between the world's two largest economies cost America US$37 billion in lost wages in 2011 and it has criticised China for manipulating its currency and investing too heavily in US Treasury bonds. Behind Canada, China is the US' second-largest goods trading partner - with US$503 billion in total trade. US services exports to China alone are worth US$25 billion.

"These are staggering figures - mind-boggling," says the US consul general to Hong Kong, Clifford Hart, who was a junior consul staff member in Guangzhou in 1984, the bicentenary of the Empress of China's trailblazing voyage.

"In February 1984, I first arrived [for my consul assignment] in Guangzhou," says Hart. "It was just nascent in those days; now millions of jobs in the US are dependent on trade with the PRC.

"I didn't know how interested the Chinese were in the 200th anniversary, but my hunch was that they were interested and were also looking for links. They were happy for us to be there. This was an opportunity," says Hart, who might have been describing the reaction to the Empress of China's arrival 200 years earlier.

Hart notes the differences between that early relationship - between a new nation and the Qing dynasty on the verge of decline - and that of today - a modern superpower dealing with a resurgent China.

"I don't like to say China is catching up, but they are a first-rank global power and we embrace that. It's difficult not to walk anywhere in China and not be immensely impressed," he adds.

Much has changed in both nations over 230 years, but Hart acknowledges the balance-of-trade issues are still a flaw in the modern commercial relationship.

"When China shifts its focus to internal consumption, that will help, but we sell them massive amounts of stuff," says Hart, referring to the fact that, behind Canada and Mexico, China is the third-largest US export market, and was worth US$103.9 billion in 2011.

That relationship is a vital part of Hart's job and he is engaged in a high-level project called Select USA, which encourages foreign direct investment (FDI) from China.

"This is the single biggest demand on my time since I have been here," says Hart.

Rather like the Forbes family encouraging Howqua to invest in US railroad projects, Hart and his team are tasked with finding investors for US industry. Hart points out that 60 per cent of all FDI from China into the US comes via Hong Kong and that when he attended a recent Select USA summit in Washington, hosted by President Barack Obama, Chinese business people, including those from the SAR, were the largest single delegation.

Now US-China trade is no longer confined to sea routes and extends way beyond tea, its functions are vastly more complex and sophisticated than haggling on a quayside in Guangzhou. Perhaps the prudent and experienced Hart, with three China assignments under his belt, is among the best placed to predict the future of this relationship.

"The truth is we have no idea what China will look like in the future. We only know that it certainly won't look like it does today."

It is tempting to imagine Captain Green saying something similar to the crew of the Empress of China, 230 years ago.

 

 

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This article is now closed to comments

CatherineOhlLaw
What were two French warships doing off the coast of Java in 1783 ?
norodnik
When the Empress of China set sail China was an autocratic dictatorship with unfair (to foreign companies) trade rules whilst having a favourable (to itself) and a lop-sided (global) trade balance. Nothing seems to have changed much.

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