Then and There Coming next Search

The Embassy and the Canton System, episode 3

One Port, A Few Firms

Every ship from the West must trade at Canton, through a customs chief called the Hoppo and a handful of licensed Chinese firms, the hong merchants, who answer for every foreigner and every debt. The episode follows James Flint, the Englishman who broke the rules in 1759 by sailing north to complain to the emperor, and then Shy Kinqua, a hong merchant ruined by his debts to the foreigners, to show how the Canton system worked and who paid when it failed. It leans almost entirely on the East India Company's own records; the hong merchants are heard only through what the Company wrote about them.

Listen in Apple Podcasts Spotify

Guangzhou Tianjin Macau
Map drawn by Then and There on Natural Earth's public domain coastlines, rivers and lakes

Transcript

Last time, the Qianlong Emperor answered every request Lord Macartney had carried halfway round the world with a no, set down in edicts to King George the Third. China possessed all things, he wrote, and had no use for Britain's manufactures. Trade, as the emperor saw it, was a favour China granted to foreigners who needed its tea and silk, and if he gave Britain special terms he would have to give them to everyone. He even warned King George that any British ships sent to trade at Ningbo or Tianjin would be forced by his officials to leave. Then Macartney was sent south, on a journey of two months by river, canal and mountain pass, in the company of the new viceroy of Canton. The viceroy was charming. He promised to grant what was reasonable and deny what was not, and when they parted he said he had written to the emperor in such terms that the British would leave China not just without dissatisfaction, but with something solid to show for it. And so at the end of 1793 the ambassador came down the last stretch of the journey toward Canton, the one port in the whole empire where the British were allowed to trade. This episode is about that port. How it worked, who ran it, what happened to a foreigner who tried to get around it, and what happened to the Chinese who were held responsible when it broke. Alongside the sources we have leaned on all season, this episode also stands on the work of Paul A. Van Dyke, on how the Canton trade really ran. To understand the Canton that Macartney wanted to change, we have to go back more than a generation before he ever set sail. In 1757 an imperial edict made Canton the sole port for the foreign trade, and prohibited that trade at every other port of the empire. When British ships had started turning up further north, the Qianlong Emperor quickly intervened, and restricted all foreign trade to Canton, except that of the Russians and the Japanese. The Russians traded overland, across the Mongolian frontier, and the trade with Japan ran the other way, through Chinese junks sailing to Nagasaki. Canton lies well over a thousand miles south of Beijing. The ships that had been wandering north were the East India Company's. In the mid 1750s it had begun sending them to Ningbo, a port on the coast of Zhejiang, much closer to the country where the tea and silk were grown, in the hope of escaping the costs of Canton. In a sense the emperor was not changing very much. His decree only put into writing what was already fact. By the middle of the century nearly every European ship bound for China was already going to Canton, where the merchants, the warehouses and the river pilots were. Canton is the great port of the far south, on the Pearl River, upstream from the South China Sea. At the mouth of the river's wide estuary sat Macau, a small Portuguese settlement on a peninsula. So what did the trade at Canton actually look like? Let me walk you through it, because every story in this season runs through this system. The trade had a season. Ships from Europe and India arrived in the summer, carried up the coast by the southwest monsoon, and left in the winter, when the northeast monsoon would carry them home. The big ships never reached the city itself. They anchored at Whampoa, an island anchorage about a dozen miles downriver, and their cargoes went up and down the river in Chinese boats. The foreigners lived and did their business in a strip of buildings along the riverbank outside the city walls, called the factories. They were not workshops but warehouses with living quarters above, each one rented by a nation or a company. The foreigners were not allowed inside the walls of the city. And when their business for the season was done, they were expected to leave Canton altogether and wait at Macau for the next one. At the top of the trade sat the Hoppo, the superintendent of customs at Canton. He was the emperor's own man, usually a Manchu from the imperial household, sent down from Beijing for a term of a few years. His job was to collect the duties and send them north. It was known as one of the richest posts in the empire, because everyone understood that the Hoppo would make his own fortune on the way. Below him were the hong merchants, a small number of Chinese firms licensed by the state to deal with the foreigners. Hong is simply the Cantonese word for a firm, or a warehouse. Every foreign ship had to have one of them as its security merchant, who stood guarantee for the ship's duties and for the good behaviour of everyone aboard. If a sailor got drunk and started a fight in Canton, it was the security merchant the officials came for. If a ship's duties went unpaid, the security merchant paid them. The arrangement suited the court very well. Instead of dealing with foreigners whose language hardly any official spoke, it dealt with a handful of its own subjects, whose property, families and persons it could always reach. The security merchant was a hostage to the good behaviour of strangers, and the price of that risk was a share in the richest trade in the empire. From 1760 the hong merchants were organised into a guild, the Cohong, which bargained with the foreigners as a body and answered to the state as a body. Then there were the linguists, Chinese interpreters licensed by the government. Their English was a trading pidgin, and their real work was paperwork, filing each ship's papers with the customs house and seeing its duties paid. And there were the compradors, licensed too, who supplied every ship and every factory with its food, its water and its servants. On the British side, all of this was the business of the East India Company, the London company that held the monopoly of British trade with China. Its men at Canton were the supercargoes, the merchants who managed the cargoes, and the senior few among them formed the Select Committee, which ran the Company's affairs there. The head of the committee was called the President. What the Company wanted from Canton above everything else was tea. The British drank it by the shipload, and the duty on it was a serious part of the British government's income. In 1784 Parliament had cut the duty on tea in Britain from well over a hundred per cent to twelve and a half, to kill off the smugglers, and the Company's tea purchases at Canton soared. And what the Company paid with, mostly, was silver, because very little that Britain made would sell in China. That imbalance was one reason the Company paid for Macartney's embassy in the first place. It hoped the emperor could be persuaded to open China to British goods, so that tea could be paid for with something other than silver. Hold on to that silver. We will come back to it before this episode is over. The court meant to keep this arrangement tight. After an Englishman broke the rules, and we will come to him in a moment, the governor general at Canton, Li Shiyao, went further. A governor general, whom the British called the viceroy, was the highest official over a pair of provinces; the one at Canton governed Guangdong and Guangxi. As a later governor reminded the throne, Li Shiyao "proposed to the Emperor and had enacted five regulations to guard against outside barbarians which were available to keep them under control". The foreigners were not to stay the winter at Canton. They were to live only in the hong merchants' factories, under watch. Chinese were not to borrow money from them or work for them, they were not to hire Chinese to carry messages for them, and soldiers were to keep guard over their ships at Whampoa. Over the years those rules were gradually neglected, and their enforcement relaxed. Some seventy years later, when the governors of Canton wanted to tighten them again, they put the whole philosophy into a single image: strictness at home, and the foreigners handled the way a good charioteer restrains and soothes his horse. Restrain and soothe. That is the Canton system in a phrase. And the man who found out how hard the reins could pull was an Englishman named James Flint.

James Flint was a member of the Company's factory at Canton, active and intelligent, and well versed in the Chinese language. Of all the supercargoes, he was the only one who could communicate in Chinese. The Company's men at Canton would later complain that his services had never been appreciated as they deserved. Almost no Briton at Canton could speak Chinese, let alone read it. The Company did nearly all its business through the linguists and their pidgin. The Company's grievance was the Hoppo. He regularly demanded bribes from the supercargoes, and he charged higher duties than he was supposed to. As the Company's men put it later, such were the exactions and arbitrary impositions of the government at Canton that it became most desirable to keep other ports open to Europeans. The people of the northern ports, the Company thought, had little love for foreign trade anyway, jealous of the trade they carried on themselves with Southeast Asia. They suspected something worse, too. They believed the hong merchants had paid large bribes to the high official at Ningbo, a man who had served at Canton before, to keep the Europeans out of every port but theirs. So the supercargoes decided to go over the heads of Canton altogether, and appeal to the emperor. Flint sailed from Macau on the morning of the thirteenth of June 1759, on board a ship called the Success. He carried a petition asking for an inquiry into the Hoppo, and for permission for the British to trade at Ningbo. Back at Canton, the viceroy was furious. He told the supercargoes to their faces that Flint would suffer his severe resentment when he came back. The viceroy knew perfectly well what Flint was really after: to lay the foreigners' grievances at Canton before the government in Beijing. Flint's first stop was Ningbo. The officials there would not accept his petition, would not even allow anyone from his ship to come ashore, and denied him provisions. No trade with Europeans, they told him, could be admitted at that port. Most men would have turned round and sailed home. Flint kept going north. He sailed on to Tianjin, the port of Beijing. Tianjin lies less than a hundred miles from Beijing, close enough that a message handed in there could be at court within days. There, an official at the fort named his price for presenting the case: five thousand taels. A tael was the Chinese ounce of silver, a little heavier than an English ounce, and the unit in which almost every large sum in this story is counted. Flint finally gave in and offered the man two thousand. A foreign ship so close to the capital was a sensation. A crowd gathered, and soldiers had to be called in to keep the mob from storming the Success. And Flint delivered to the principal official of the place a memorial to the emperor, which at his request was sent on at once. A memorial was a formal written report or petition to the throne, the ordinary way the emperor heard from his officials. Foreigners were never supposed to send one. It worked. The emperor was moved by the foreigners' complaints about corruption at Canton, and he appointed a commissioner to investigate the Hoppo. The imperial government ordered a man of high rank to go to Canton, and Flint was told to join him and travel south with him by land. The Success was not so lucky. The ship and its crew were never heard from again. Flint, meanwhile, went south through the heart of the empire. Long afterwards, the Company's men at Canton gave him his due: this enterprising gentleman, they wrote, "thus enjoyed the distinction of being the first British Subject who travelled through the interior of the Chinese Empire". An Englishman who spoke Chinese, travelling the length of China in an official's train, on his way to see justice done to a corrupt customs chief. For a moment it looked as if the whole system might bend.

At the same time, an express went to a senior official in Fujian, the next province up the coast, ordering him to Canton without delay to suspend the Hoppo. Those orders were carried out. He, the commissioner and the viceroy of Canton were to sit in judgment on the Hoppo together, and report to the emperor. Flint seems to have been on the best possible terms with his travelling companion. When he reached Canton he lived for nearly a fortnight inside the city, a privilege no foreigner had ever enjoyed before. Then he was told that the accusations against the Hoppo had been proved, and he went back to his place in the factory. A few days later the three great officials received all the foreign representatives, who presented addresses describing the hardships they had suffered. The Hoppo, they were told, was deposed, and another would soon be appointed. The man who replaced him was more honest. Then came the list of charges taken off, with immediate effect. A surcharge of three per cent on all the silver paid in for duties, laid on under the pretence of making up the difference between the weights of Canton and the weights of Beijing. Duties at Canton were paid in sycee, silver cast into ingots and weighed out, and every weighing was a chance for someone to take a cut. Then the increase in duties on goods brought from Foshan to Canton. The charge for going to and coming from Macau. The presents expected by the Hoppo's house whenever a ship went away. The fees squeezed out of the compradors and the linguists. Foshan was a great manufacturing town a short way upriver from Canton, famous for its iron and its pottery. Every imposition, in fact, except a charge of one thousand nine hundred and fifty taels and a levy of six per cent, which went to the emperor himself, and which the supercargoes were sure had been misrepresented to him. They were firmly of the opinion that even those would be remitted, if only they could get their case properly put. A single Englishman with a petition had reached the doorstep of the capital and brought down the most powerful official in the Canton trade. It looked like proof that the emperor would listen, if only you could reach him. It was, as it turned out, only a calm before a gathering storm. The Company always believed that the hong merchants' money had been at work in secret all along, to overturn whatever influence the factory seemed to have won with the government.

The storm came in the form of an invitation. The viceroy wished to see Flint, the merchants told the supercargoes, to let them know the emperor's orders about their affairs. The supercargoes asked to go into the city with him, and were allowed. At the viceroy's palace, the merchants proposed that they go in one at a time. The British refused: if Flint was called on the Company's business, they would all be present. They were received by an official at the first gate, and passed through two courtyards with every appearance of courtesy from the officers waiting there. Then, at the gate of the inner court, as the supercargoes told it, "our swords were forced from us", and they were hurried into the viceroy's presence. There, they believed, the viceroy's men tried to make them pay homage in the Chinese fashion, and when they would not, threw them to the ground. The kneeling question, decades before Macartney. The viceroy saw them resolute, and determined, in their words, "on no account to submit to these base humiliations", and he ordered his people to stop. Then he called Flint forward, and pointed to a paper. It was, he said, the emperor's edict: Flint was banished to Macau for three years, and after that he was to go home to England, and never come to China again. And in the same breath the viceroy told them that their complaint against the Hoppo was true, that the emperor was pleased with it, and that the Hoppo "was proved to be a very bad man". Both things were true at once. The complaint was right, and the man who made it was finished. What disturbed the emperor was not what Flint had said, but how he had said it: the audacity of going around the established channels to reach the throne. Under the Canton system a foreigner was never supposed to address the officials directly, let alone the emperor. A petition from the foreigners went through the hong merchants, who passed it up to the Hoppo or the viceroy. The authorities at Canton locked Flint up in a jail at the edge of Macau. The governor described his sentence as "such amazingly gracious treatment that he should think of it with tears". The emperor saved his real anger for his own subjects. The Chinese who had helped Flint learn the language and write his petition, he decided, were the ones most to blame. Flint's Chinese teacher was taken into custody and beheaded. His head was hung up on display, as a public warning to any other Chinese at Canton who might think of helping a foreign trader learn the language. Think about what that warning said. Teach a foreigner your language, help him write to the throne, and this is what happens to you. After the affair the emperor insisted again on strict obedience to the rule that the foreigners leave Canton when their business was done, though some of them kept finding reasons to linger. It was rule breaking by the English that had led Li Shiyao to propose his five regulations, to keep the foreigners under control. Flint was finally released in November 1762, after three years in prison, and banished. And the failure of his petition marked the end of any hope that the Company would be allowed beyond the narrow confines of the port of Canton, for more than eighty years. That was the lesson every Briton at Canton remembered. The emperor might well listen to you. But you would pay for making him. The Company drew a different lesson. An appeal to the emperor, it believed, could work; Flint's ruin it blamed on the corruption of the Chinese, and on the subservience of the British authorities. Two lessons, then, from one man's journey north. Keep both of them in mind as this season goes on.

Flint shows us what the system did to a foreigner who broke it. Now I want to show you what it did to the Chinese at its centre, and for that we jump forward again, to the years of Macartney's embassy. Shy Kinqua was a hong merchant, and since the death of his own father he had been the most considerable merchant in Canton of the younger generation. Shy Kinqua was a trade name. His own name was Shi Zhonghe. The qua at the end of so many of these names was a polite title, something like mister, and the foreigners knew the hong merchants almost entirely by these trade names. In one season he contracted to deliver thirty eight thousand chests of tea to the Company, out of a hundred and seven thousand in all, more than a third of everything it bought. The Company trusted him with more than tea. As in earlier years, the Committee left silver with him for safe keeping: ninety four chests, holding four hundred and seventy thousand dollars. The dollar here was the Spanish silver dollar, minted in Mexico and Peru, the coin the whole trade ran on. The Company reckoned a dollar at a little under three quarters of a tael. But a hong merchant's money was never his own for long. He took the foreigners' imports, woollens above all, which often sold at a loss in China, and he paid the tea dealers months in advance to secure the next season's tea. Shy Kinqua ran short. Later he confessed that he had used part of the Company's silver, because the long credit left him so short of money to secure his tea contracts. By the Company's count he owed it seven hundred and nineteen thousand two hundred and fifteen taels, and a month later he received another two hundred and forty five thousand six hundred and ninety in advances under his tea contracts. That was nine hundred and sixty four thousand nine hundred and five taels in all, near enough a million. The supercargoes could see where this was going, and they tried not to hurry it. A bankruptcy would bring in the government, and that was the last thing they wanted. What gave him away was the customs house. He failed to pay the duty on a consignment of woollens, and that failure brought his condition to the knowledge of the Hoppo and the viceroy. Under Qing rules a hong merchant's debts to foreigners were never a private matter. When hong merchants had failed before, owing great sums to foreigners, the emperor had them exiled and made the other hong merchants pay their debts. The Hoppo, meanwhile, had done very nicely. The Committee reckoned he had taken in not less than two hundred and forty thousand dollars in his six months in office. Then the supercargoes learned that the title deeds to Shy Kinqua's property had been handed over to a number of tea merchants, with what they called perfidy unexampled. For a time the prisoners were allowed to lodge in a small house in the city, hired at their own expense, under guard. The officials decided that his case was so serious it had to be reported to Beijing.

Through the season of 1795 Shy Kinqua appears in the Company's records as a ruined and broken man. The lesser officials had terrified him. A deficit of such unheard of size, they told him, would bring a punishment of unusual severity. So he asked the governor general for permission to visit the Europeans once more. He had a faint hope that the sight of him, a prisoner in chains, would move them to give up part of their claims. On the twenty third of June 1795 he was brought to Macau by the magistrate of Nanhai county and a guard, with two of the senior hong merchants at his side. Nanhai was the county that took in the western half of Canton, and a county magistrate was the lowest rung of the official ladder, the official closest to the people. Waiting at Macau was the President of the Select Committee, a man named Browne. Browne knew this world well. The Company had sent him out a few years before at the head of a special committee, to announce Macartney's embassy to the authorities at Canton. Browne was in a painful position. He was not his own master; he was the servant of the Company whose affairs he managed. And he had no control over the other creditors, some of whom were British subjects acting for people who were not. At first he refused to see the prisoner. In the end he agreed. He went with the merchants to the house where the magistrate was waiting with his prisoner. After a few minutes of conversation with the official, Shy Kinqua was brought in. He immediately threw himself down, and struck the ground with his forehead again and again, with all the look of the abject humiliation criminals in China had to submit to, until the official ordered him to rise. Then the magistrate, with all his attendants and the other two merchants, left the room. Shy Kinqua tried to throw himself down again, to beg the President for compassion. Browne stopped him. Notice what is happening in that room. The full bow to the ground, the act the British would not perform even for the emperor, was being performed by a Chinese merchant in front of a British one. The scene, the Company's record says, was distressing. Shy Kinqua pleaded the services of his father and himself over many years, the favour he had enjoyed, and the warm relations there had always been between him and the supercargoes. To all of it Browne could give only the one answer. He was not the master here, and he could make no reduction in the Company's claims. The prisoner was dressed in a coarse jacket and drawers, with white mourning shoes but no stockings. His hair had grown long instead of being shaved clean. And there was "a Chain round his Neck and on both his wrists". Under the Qing every man shaved the front of his head and wore the rest in a long braid, the queue. A head left unshaved was the look of a mourner, or of a man in disgrace, and white was the colour of mourning. His whole appearance, the record says, was squalid, and suited to the part he was intended to act. And here the Company's men hardened their hearts. It was impossible, they admitted, not to feel for a man under such a reverse of fortune, above all for those who had lived with him in friendship and confidence. But the President could not help seeing art in it, a studied distress, and that greatly weakened its force. For all his affliction, Shy Kinqua was still holding back property from his creditors, and he heard the President's remarks about it with what the Company called insensibility and inattention. Their pity, they concluded, should give way to regret that he probably had little cause to fear the punishment he pretended to dread. The only result of the visit was a deal over scraps. The Company and the private creditors agreed to take over some promissory notes signed by foreign merchants, and some teas shipped on Shy Kinqua's account in Genoese and American ships, worth an estimated two hundred and one thousand dollars. They were wrong about the punishment. When the case was settled, his estate was valued at two hundred and eighty thousand taels, and the remaining six hundred thousand were to be paid off in six annual instalments. That money came, in the end, from the other hong merchants. They took the burden on between them, and each was debited his share in the supercargoes' books. His second brother, Wyequa, was banished to Ili. Ili was the empire's far northwestern frontier, in Central Asia, thousands of miles from Canton, where the Qing sent officials and criminals into exile. Shy Kinqua stayed in prison. He was beaten three times, the last time on the face, and lost all his teeth. To the last, the Company thought he had been the dupe of his more artful brother, and on his deathbed he lamented it. That is the other face of the Canton system. The foreigners were kept on a short leash, but in the end they sailed home. The man who stood guarantee for them could lose his fortune, his family's firm and his freedom. So who actually gained from running the West's trade this way? The emperor got his duties, and a frontier he could manage from a distance. The Hoppo got rich. The Company got its tea, a small set of merchants it knew, and a guarantee that if one of them failed, the rest would make good his debts. And the hong merchants got a licence to the most valuable trade in China, along with every risk that came with it. Some of them, as we will see later in this season, became fabulously rich. Many more ended like Shy Kinqua.

Which brings us back to the silver. For most of the eighteenth century silver flowed into China. Foreign ships came to Canton carrying chests of Spanish dollars, mined in the Americas, and went home carrying tea, silk and porcelain. China's own economy ran on silver too. Land taxes were reckoned in it and large debts were settled in it, and the empire mined little of its own. Yet in these years Canton kept running short of it. When the Company's books opened on the twenty fourth of June 1796, there were only thirteen thousand and eighty one taels of silver in its treasury. Part of the trouble was the country traders, who wanted silver as well. Country traders were private merchants, British, Indian and Parsee, who carried goods between India and China under licence from the Company, above all raw cotton from India. And part of the trouble was the officials. The duties, and the customary presents to officials, were paid in silver, and that silver was invariably sent away in coin. The periodical call for duties that had to be paid in silver, the Committee wrote, was a source of the most distressing embarrassment to the merchants. On the twenty ninth of December the supercargoes wrote home urging the speedy dispatch of an ample remittance of bullion. It did not get better. Later, one August, two hong merchants could not find the silver to meet what they owed. Notice who felt a shortage first. The Company could write home for bullion and wait. The hong merchants had duties to pay to the Hoppo on fixed dates, in silver, whether the Company's ships had brought it or not. As the Chinese year drew to its end, the Committee wrote that the distress of the merchants was hardly to be described. The end of the Chinese year, in late January or February, was the time when every debt in China fell due, and a merchant who could not pay lost face and credit together. The Company advanced them French and Dutch coins, and on those they lost between fourteen and eighteen per cent. The Chinese trusted the Spanish dollar, which they knew. Any other coin had to be weighed and tested, and changed hands at a discount. So hold on to that picture: silver pouring into China to pay for tea, and still never quite enough of it at Canton. By the time this season is over, it will be running the other way.

Shy Kinqua was not the last. On the twenty sixth of January 1798 another hong merchant, Geowqua, came to the Committee and told them he was in difficulties. He already owed the Company upwards of sixty thousand taels, and he was heavily involved with Parsee merchants over a ship's cargo. The Parsees were a community of merchants from the west coast of India, descended from Zoroastrians who had fled Persia centuries before, and they were among the biggest players in the trade from India to China. Geowqua proposed that twenty per cent be taken off the private claims against him. The creditors would not have it. The Committee advanced a further twenty thousand dollars in coin to a merchant named Puiqua, on Geowqua's account. So Shy Kinqua's fall was not bad luck. It was the pattern. A hong merchant stood between an emperor who held him responsible for everything the foreigners did and owed, and foreign creditors who lent freely and pressed hard when he failed. This was the port Macartney sailed into at the end of his embassy, the system he had been sent to break, with its rules, its squeeze, its hostages and its silver. And for all the viceroy's kind words on the road, it was still standing exactly as before. And all the while, far to the north, the old emperor who built this system had been deciding how to leave it. Next time, we go back a little, to Beijing, where the Qianlong Emperor is about to give up his throne to his son, but not, it turns out, his power.

Sources