Chapter XI: Trade Under the Treaty of Nanking (2)

Any modification for the better in our relations must, I
believe, begin here. We must either find means of inducing
the Chinese Government to diminish the evil by legalising
the trade, or enter the field of discussion ... with a
stone wall before us.... The legalisation would go far to
diminish the obstacle such an outrider to our treaty
creates; but far better would it be, and more profitable in
the end in view of what China might become commercially to
Europe, America, and to Great Britain specially, if the
Indian Government abandoned their three million sterling
revenue from the cultivation of opium, and our merchants
submitted to the temporary prejudice or inconvenience of
importing silver for the balance of trade.

Nearly twenty years afterwards we find Mr Alcock still engaged on the problem how to diminish the trade in opium without dislocating both the trade and finance of India, his last act on retiring from China in 1870 having been to propose a fiscal scheme of rearrangement by which the opium trade might undergo a process of slow and painless extinction.[23]

The attitude of the British Government towards the opium trade has always been ambiguous. Succeeding to the inheritance of the East India Company as the great growers of opium, they had to carry on its traditions. These had led the Company in its trading days into some striking inconsistencies, for though they cultivated the poppy expressly for the China market, employing all the intelligence at their command to adapt their product to the special tastes of the Chinese, they yet refused to carry a single chest of it in their own ships which traded to China. By this policy they thought they could exonerate themselves in face of the Chinese authorities from participation in a trade which was under the ban of that Government. The importation of the drug was thus thrown upon private adventurers, and whenever the subject was agitated in Canton and Macao, none were so warm in their denunciations of the trade as the servants of the East India Company. This was notably the case with Captain Elliot, who, after leaving the Company's service and becoming representative of the Crown, never wearied in his strictures on the opium traffic.

The question of legalising the traffic had frequently before been considered by the Chinese Government,[24] and it was fully expected that this was the policy which would prevail in Peking in 1837. The pendulum swung to the opposite side, namely, that of prohibition, and legalisation was not adopted until 1858. But once adopted, the idea made such progress that in 1885 the Chinese Government made a successful appeal to the British Government to be allowed to treble the import duty authorised in 1858, and that the Colonial Government of Hongkong should render them special assistance in collecting it.

IV. CHINESE EXPORTS.

Efforts of the consuls to stimulate trade -- Alcock's work
at Foochow -- His despatches -- Exhibition of 1851 --
Exhibits of Chinese produce sent by Alcock.

The continuous efforts made by the consuls in the first decade after the treaty to stimulate the action of foreign merchants in laying hold of all the opportunities offered to them for extending their connections with the Chinese trade ought not to be passed over without notice. It was the burden of Consul Alcock's labours while in Foochow to gather information from every source, to digest it as well as he was able, and to lay it before his countrymen; and if he, in his despatches to the plenipotentiary, sometimes reflected on what seemed to him the apathy and want of enterprise of the merchants, that must be set down to a laudable zeal to make his office fruitful of benefit to his country. The same spirit animated his proceedings in Shanghai. The demand made for exhibits for the Great Exhibition of 1851 found Mr Alcock and his lieutenant Parkes eager to supply samples of Chinese products of every kind likely to be of commercial interest. On applying to the mercantile community of Shanghai for their co-operation in collecting materials, he found them not over-sanguine as to the results of such an effort, and in his despatch of December 1850 to the plenipotentiary he remarks that "the British and foreign residents in Shanghai appeared to feel that the impossibility of gaining access to the great seats of manufacture or the producing districts for raw material placed them in too disadvantageous a position to do justice either to themselves or the resources of the empire, which could only be very inadequately represented, and in a way more calculated to mislead than instruct." "The conclusion," he goes on to say, "at which the mercantile community has arrived has gone far to paralyse all exertion on my part." Nevertheless, with the restricted means at his disposal, he set to work to collect specimens of Chinese produce and industry and to transmit them to the Board of Trade for the use of the Commissioners. Of objects of art he sent a great variety in bronze, inlaid wood, porcelain, soapstone, and enamels, and the fancy articles which have since acquired such great reputation in the world that dealers in European and American capitals send out commissions every year to make extensive purchases. Colours used by the Chinese for dyeing purposes in twenty shades of blue, silk brocades, and many valuable products of the Chinese looms, were well represented, and the commoner utensils, such as scissors, needles, and razors, some of which were within the last few years specially recommended in consular reports to the notice of English manufacturers, as if the suggestion were made for the first time. Of raw material, samples were sent of hemp, indigo, and many other natural products; and when it is considered how eager the British mercantile community appeared to be to increase their importation of Chinese produce--be it tea, silk, or any other commodity--in order to balance the export trade, it is interesting to observe that in those early days a number of articles of export were described and classified, with an account of the districts of their origin, which have only taken their place in the list of exports from China within the last twenty years or so. These were sheep's wool of six different descriptions, and camels' hair, which are now so extensively dealt in at the northern ports of China. Perhaps these articles were not seen in bulk by foreigners until after the opening of the new ports in 1861, and it is worthy of remark that even after this discovery, and sundry experimental shipments, many years elapsed before the special products of Northern China became recognised articles of foreign trade. These now include straw plait, sheep's wool, goats' wools, goats' skins, dogs' skins, camels' hair, horses' tails, pigs' bristles, and a number of other articles of export which might perfectly well have been brought to the foreign market of Shanghai even before the opening of the northern ports. What was wanted was the knowledge that such products were procurable and the organisation of a market for their disposal in China, in Europe, and the United States. To stimulate inquiry into these matters was an object of the consular reports of the early days, and the fact that the seed then sown seemed to have been buried in sterile soil for thirty years affords a reasonable prospect that from the more advantageous basis on which commercial men now stand still larger developments of international commerce may be reserved to future adventurers.

V. BRITISH EXPORTS.

Slow increase -- Turn of the scale by the Shanghai silk
trade -- Consequent inflow of silver to China -- Alcock's
comment on the Report of Select Committee -- His grasp of
the true state of affairs.

This department of trade presents little else but a record of very slow improvement, with some rather violent fluctuations due to obvious and temporary causes. In the first year after the treaty of Nanking the value of shipments to China from the United Kingdom was £1,500,000; in 1852, £2,500,000; in 1861, £4,500,000, decreasing in 1862 to £2,300,000, and rising in 1863 to £3,000,000; after which period it steadily increased to £7,000,000, at which it has practically remained, with the exception of two or three years between 1885 and 1891, when it rose to £9,000,000.

The theory of the merchants who gave evidence before the Committee of 1847, that an increase in the exports from China was all that was needed to enable the Chinese to purchase larger quantities of manufactured goods, has by no means been borne out by the subsequent course of trade. For although the Chinese exports have been greatly extended since then, that of silk alone having more than sufficed to pay for the whole of the imports from abroad, there has been no corresponding increase in the volume of these importations. What happened was merely this, that the drain of silver from China, which was deplored on all sides up till about 1853, was converted into a steady annual inflow of silver to China.[25] Consul Alcock, having been requested by her Majesty's chief superintendent of trade to make his comments on the Report of the Select Committee, dealt comprehensively with the whole question of the trade between Europe, India, and China, and evinced a wider grasp of the true state of the case than the London merchants had done. In a despatch dated March 23, 1848, the following passages occur:--

Nearly the whole of the evidence furnished by the witnesses
on our trade is calculated to mislead those imperfectly
acquainted with the details. The existence of this relation
[the importation of opium and raw cotton from India] is
kept out of sight, and conclusions are suggested which
could only be maintained if the Indian imports into China
did not form a part of our commerce, and did not come in
direct competition with the import of staple manufactures.

To counteract as far as may be in my power the erroneous
tendency of the partial evidence which the Blue-Book
contains on this part of the subject, I have ventured for
the information of her Majesty's Government to bring
forward such facts and inferences as seem to me to place in
the strongest light the fallacy of the argument mainly
insisted upon before the Committee--viz., that we have only
our own consumption of tea to look to as indicating the
extent to which we can exchange our manufactures--that this
is the only limit of our imports into China. But imports of
what? Not certainly of cotton and woollen goods, for we
already export of tea and silk from China to the value of
some four millions sterling, and cannot find a profitable
market for manufactured goods to the amount of two
millions; and a somewhat similar proportion, or
disproportion rather, may be traced during the monopoly of
the East India Company, during the free-trade period prior
to the commencement of hostilities, and since the treaty.
Say that from a reduction of the tea duties or any other
cause we _double_ our _exports_ from China as we have
already done since 1833, from what data are we to infer
that in this same proportion the export into China of
British manufactures will increase; or in other words, that
for every additional million of tea there will be an
equivalent value expended upon our cotton fabrics?

The anticipated result is contradicted by all past
experience in China, and a moment's reflection must show
that the essential elements have been overlooked. 1st, That
there is a balance of trade against the Chinese of some
$10,000,000, which must adjust itself before any increase
of our exclusively British imports into China can be safely
or reasonably expected, for which an additional export of
20,000,000 lb. of tea and 10,000 bales of silk is required.
2ndly, That if such increase of our exports hence restored
the balance of trade to-morrow, the proportion in which an
increased import of our goods would take place must depend
upon the result of a competition of cotton goods against
opium and raw cotton--all three objects in demand among the
Chinese; and the proportion of each that may be taken under
the assumed improvement depends upon the relative degree of
preference exhibited by our customers for the different
articles. The two latter have proved formidable rivals to
our manufactures, nor is there any reason to anticipate
beneficial change in that respect.

The argument, therefore, that the only limit to our imports
into China is the consumption of tea and silk in Great
Britain, if meant to be applied, as it appears to be in the
evidence, exclusively to British imports--that is, to
cotton and woollens--is fallacious, and can only be
sustained by dropping the most important features of the
import trade, by treating opium and raw cotton as though
they had neither existence nor influence upon our British
staple trade.

The influence of this mode of reasoning is calculated to be
the more mischievous that it comes from gentlemen of
practical mercantile information, and purports to suggest a
remedy for an evil which is, in truth, of our own creating,
and must recur as often and as certainly as the same causes
are in operation. The trade in China during the last three
years has been a losing, and in many instances a ruinous,
trade, not because the English do not drink more tea, or
the Chinese do not find it convenient to wear more cotton
of our manufacture, but simply because in such market the
supply has not been carefully regulated by an accurate
estimate of the probable demand. Our merchants at home have
unfortunately been led by such reasoning as I have quoted
to assume that in proportion as we purchase more tea the
Chinese would lay out more money in cotton goods, and that
the one might be taken as a true estimate of the other.
Hence came shipments after the treaty so disproportioned to
the actual wants or state of demand in the Chinese market
that an immediate glut, with the consequent and necessary
depreciation in price, followed. Nor did the evil end here:
a return was of necessity to be made for this enormous
over-supply of goods, hence more tea was shipped than the
legitimate demand of the English markets would have
suggested or justified, and at the other end of the chain
the same depreciation and ruinous loss was experienced....

I have submitted in this and the preceding Reports my
strong conviction that other conditions than a mere
increase in our exports hence are essential. Of these I
have endeavoured to show the principal and most important
are access to the first markets, the removal of or
efficient control over all fiscal pretexts for restricting
the free circulation of our goods in the interior and the
transit of Chinese produce thence to the ports, and,
finally, the abolition of all humiliating travelling limits
in the interior, which more than anything else tends to
give the Chinese rulers a power of keeping up a hostile and
arrogant spirit against foreigners, and of fettering our
commerce by exactions and delays of the most injurious
character.

The conditions of the trade were, in fact, simpler than the merchants had imagined. The Chinese entered into no nice estimates of the balance of imports and exports, but purchased the goods which were offered to them so far as they were adapted to their requirements--and there is no other rule for the guidance of foreign manufacturers in catering for the great Chinese market.

VI. NATIVE TRADE.

Inter-provincial trade -- Advantages of the employment of
foreign shipping -- China exports surplus of tea and silk
-- Coasting-trade -- Salt.

The great reservoir of all foreign commerce in China is the old-established local inter-provincial trade of the country itself, which lies for the most part outside of the sphere of foreign interest excepting so far as it has come within the last forty years to supply the cargoes for an ever-increasing fleet of coasting sailing-ships and steamers. This great development of Chinese commerce carried on in foreign bottoms was thus foreshadowed by Mr Alcock as early as 1848:--

The disadvantages under which the native trade is now
carried on have become so burdensome as manifestly to
curtail it, greatly to the loss and injury of the Chinese
population, enhancing the price of all the common articles
of consumption: any measures calculated, therefore, to
exempt their commerce from the danger, delay, and loss
attending the transport of valuable produce by junks must
ultimately prove a great boon of permanent value, though at
first it may seem the reverse.

In a political point of view the transfer of the more
valuable portion of their junk trade to foreign bottoms is
highly desirable, as tending more than any measures of
Government to improve our position by impressing the
Chinese people and rulers with a sense of dependence upon
the nations of the West for great and material advantages,
and thus rebuking effectually the pride and arrogance which
lie at the root of all their hostility to foreigners.

In a commercial sense the direct advantage would consist in
the profitable employment of foreign shipping to a greater
extent: it would also assist the development of the
resources of the five ports--more especially those which
hitherto have done little foreign trade. I have entered
into some details to show how the carrying trade may work
such results, particularly in reference to sugar, which
promises to pave the way at this port to large shipments in
this and other articles for the Chinese.

A more effective blow will be given to piracy on the coast
by a partial transfer of the more valuable freights to
foreign vessels than by any measures of repression which
either Government can carry out, for piracy will, in fact,
cease to be profitable....

A further extension of the trade between our Australian
settlements and China, and our colonies in the Straits with
both, may follow as a natural result of any successful
efforts in this direction,--the addition of a large bulky
article of regular consumption like sugar alone sufficing
to remove a great difficulty in the way of a Straits
trade....

If this can be counted upon, I think it may safely be
predicated that at no distant period a large and profitable
employment for foreign shipping will be found here totally
exclusive of the trade with Europe.

It has been said with regard to tea that the quantity sold for export is but the overflow of what is produced for native consumption, and to silk the same observation would apply. Essentially a consuming country, it is the surplus of these two articles that China has been able to afford which has constituted the staple of export trade from first to last. It is an interesting question whether there may not be surpluses of some other Chinese products to be similarly drawn upon. If the foreign trade has been distinguished by its simplicity, being confined to a very few standard commodities, such cannot be predicated of the native trade, which is of a most miscellaneous character. It is impossible to give any statistical account of the coast and inland traffic of China. Any estimate of it would be scarcely more satisfactory than those which are so loosely made of the population. In the early days, when the ports opened by the treaty of 1842 were still new ports, great pains were taken by the consuls to collect all the information they could respecting purely Chinese commerce, which they not unnaturally regarded as the source whence the material of an expanded foreign trade might in future be drawn. Especially was this the case at Foochow under the consulship of Mr Alcock and the assistantship of his energetic interpreter, Parkes. We find, for instance, among the returns compiled by that industrious officer of three months' trading in 1846, the quantities and valuations of over fifty articles of import and as many of export given in great detail: imports in 592 junks of 55,000 tons, and of exports in 238 junks of 22,000 tons. Of the sea-going junks he gives an interesting summary, distinguishing the ports with which they traded and their tonnage, with short abstracts of the cargoes carried. These amounted for the year to 1678 arrivals from twenty different places, and 1310 departures for twenty-four places; and this at a port of which the consul wrote in 1847, "No prospect of a British or other foreign trade at this port is apparent in the very remotest degree." Every traveller in every part of China is astonished at the quantity and variety of the merchandise which is constantly on the move. It is this that inspires confidence in the boundless potentialities of Chinese commerce, which seems only waiting for the link of connection between the resources of the empire and the enterprise of the Western world.

Besides the sea-borne trade of which it was possible to make these approximate estimates, there is always in China an immense inland trade; and at the time when piracy was rampant on the coast, and before the aid of foreign ships and steamers was obtained, all the goods whose value enabled them to pay the cost of carriage were conveyed by the inland routes, often indeed from one seaport to another, as, for instance, between Canton and Foochow, Ningpo, Shanghai, &c.; and it is still by the interior channels that much of the trade is done between Shanghai and the provinces to the north of it, which would appear, geographically speaking, to be more accessible from their own seaports.

The relation of the Government to the inter-provincial trade is, in general terms, that of a capricious tax-gatherer, laying such burdens on merchandise as it is found able and willing to bear. The arbitrary impositions of the officials are, however, tempered by the genius of evasion on the part of the Chinese merchant, and by mutual concession a _modus vivendi_ is easily maintained between them.

The item of trade in which Government comes into most direct relation with the trader is the article salt, which is produced all along the sea-coast, and is likewise obtained from wells in the western provinces. Like many other Governments, the Chinese have long treated salt as a Government monopoly. As the manner in which this is carried out illustrates in several points the ideas that lie at the root of Chinese administration, some notes on the subject made by Parkes at Foochow in 1846, and printed in an appendix to this volume, may still be of interest.[26]

FOOTNOTES:

[20] The annual value of the whole foreign trade with China, imports and exports, is now about £70,000,000.

[21] His predecessors had been governors of Fort William in Bengal.

[22] Eastern countries send to Europe half of the whole consumption of the West--China yielding 35 per cent to 40 per cent of the entire supply, Japan 12 per cent.

[23] It is worth notice that this consistent opponent of the opium trade during fifty active years should have come under the ban of the Anti-Opium Society in England when the discussion of this important question degenerated into a mere polemic.

[24] Import duty had been regularly levied on opium for a hundred years, the prohibition of importation having been decreed after 1796 (Eitel).

[25] During the last two decades important factors--such as foreign loans, armaments, and the like--have so influenced the movements of gold and silver that they bear no such simple relation to the "balance of trade" properly so called as was formerly the case.

[26] See Appendix IV.