Financial History 145 Spring 2023 - Page 26

Troubled Waters

How Americans ’ Trade with China Mixed Opium with Money

William Daniell , The European Factories , Canton , 1806 , oil on canvas , https :// collections . britishart . yale . edu / catalog / tms : 720 , Courtesy , Yale Center for British Art , Paul Mellon Collection , B1981.25.210
By Dael A . Norwood
When the ship Congress sailed from Boston bound for the Dutch colonial port of Batavia in 1824 , it went using some old habits , and some new . On the more traditional side of the ledger , Jacaob Caswell and Benjamin Brintnall entrusted “ one Hundred Spanish milled Dollars ” to an agent onboard who promised to “ Carey & Invest ” it “ from port to port .” Using this classic cabotage strategy , Caswell and Brintnall aimed to make the most of limited resources .
William Gray , the Congress ’ s owner , adopted a more sophisticated approach . A fixture of the Massachusetts mercantile elite , Gray let the business relationships he spent a lifetime cultivating guide his investments in the Congress . He instructed
An early 19th-century view of the “ floating city ” of ships on the Pearl River ( Zhujiang ) at Canton ( Guangzhou ), with the foreign factories in the background . the captain of the ship , Nathaniel Kinsman , to consult his contacts in Asia — resident commission merchants — before making any purchases . Gray also stocked the ship using information his network provided . He packed the hold with $ 7,786 worth of candles , beef , flour and seltzer water — all readily salable at any European colonial port — and invested $ 19,318 in opium , a smokable narcotic with a growing market in Southeast Asia , especially in China ’ s southern ports . Gray also gave Kinsman access to $ 50,000 in credit with his London bankers , Baring Brothers , so he could take advantage of good prices for return cargoes as he encountered them : tea at Guangzhou ( Canton ), sugar at Manila or cotton at Kolkata ( Calcutta ). This credit could be accessed via bills of exchange , which Kinsman most likely carried as a packet of preprinted forms — making the Congress ’ s lightest cargo simultaneously its most valuable , modern and secure .
Gray ’ s cargo in the Congress cannily exploited a new global system of exchange linking American cotton , Indian opium and Chinese tea through the medium of British bank money . Though not centrally directed , this system depended on capital flowing through London-centered networks in the form of silver dollars , bank drafts and bills of exchange . This movement of money had far-reaching consequences . It promoted the development of European empires in the Pacific , and it revolutionized the “ China trade ,” the maritime shipping business of exchanging products between East Asia and the Atlantic world . It reached the United States , too , funding the expansion of the cotton frontier in the South , wheat agriculture in the West and manufacturing in the North . Interconnected , global and powerful , this modern capitalist system — and Americans ’ new role in it — took shape in the aftermath of the Napoleonic Wars .
When peace broke out in Europe in 1815 , old systems of political economy broke with it . Before the decades of global warfare between Great Britain and France
24 FINANCIAL HISTORY | Spring 2023 | www . MoAF . org