Europe in China/Chapter 3


Monopoly versus Free Trade.

However galling this stolid assertion of self-adequacy and supremacy, and this persistent exclusivism of the Chinese Government, must have been to the East India Company's officers and to the Ambassadors specially commissioned to bolster up the position of the East India Company in China, it must not be forgotten that the East India Company was, within its own sphere, just as haughty, domineering and exclusive a potentate, as any Emperor of China. Private British merchants, scientists, missionaries, and even English ladies, had us much reason to complain of the tyranny of the East India Company's Court of Directors, as their Supercargoes suffered in their relations with the Chinese Government. When naturalists or missionaries, entirely unconnected with trade, desired to pursue their noble avocations at any port of Asia occupied by the East India Company, they were either strictly prohibited and ordered off, or permission was granted in exceptional cases, as a matter of extraordinary favour, and under galling injunctions and restrictions.

As to the treatment of foreign ladies, the coincidence between the policy of the Chinese Government and that of the East India Company is striking. When the first Englishspeaking lady, a Mrs. McClannon who, with her maid, had been shipwrecked on her way to Sydney and picked up at, sea by the American ship Betsey, arrived at Macao, the Chinese officials professed themselves shocked. They refused to admit the ship to trade. What with barbarian merchants, residing on the coast, and what with flying visits by naval officers, they said, it was difficult enough for Chinese officials to keep, the foreign trade in order, but that barbarian women should also enter the hallowed precincts of the Celestial Kingdom was an outrage of Chinese fundamental principles of propriety and beyond all endurance. However, as usual, a cumshaw (bribe) smoothed away the objections, only the Captain of the Betsey, who so gallantly had rescued the shipwrecked women, was officially informed that he must never do it again, and take away the women as soon as possible on pain of permanent exclusion from the trade. As a parallel to this Chinese interdict placed on women, the Court of Directors of the East India Company renewed (A.D. 1825) a previously existing stringent order that European females were under no circumstances to be admitted to Canton. So strict was this rule, and so engrained did it become in the trading community of Canton, that the Hongkong successors in the old Canton trade maintained, until comparatively recent years, the same principle in the form of restrictions which the leading firms placed on marriage in the case of their employees.

As regards private traders in Canton, the East India Company watched, for nearly two centuries, with Argus' eye against the violation of their monopoly by adventurous intruders. No British subject was allowed to land at Canton except under a passport from the Court of Directors. Nor was any British ship permitted to participate in the China trade except when owned or chartered, or furnished with a licence, by the Company or by the Indian Government. Such licences were moreover subject to be cancelled at any moment by the Select Committee at Canton, who had also legal power to deport any British subject defying their authority. Nevertheless there were bold spirits who forced their way in. In the year 1780 a Mr. Smith was discovered at Canton trading on his own account, but was immediately ordered off without mercy. However, the East India Company's power extended only over their own nationals, and private traders of other nationalities openly defied the Company whilst profiting by its presence. The Portuguese (from Macao), the Spaniards (from Manila), and the Dutch (from Formosa) had preceded the East India Company in the Canton trade, and could not be ousted. Danish and Swedish merchants (A.D. 1732), French (A.D. 1736), Americans (A.D. 1784) and others forced their way in, and international comity on the one side and Chinese policy on the other protected them against the interference of the East India Company.

Soon, moreover, private British merchants also secured admission to Canton, and openly defied the Company's monopoly by taking out foreign naturalization papers. Thus, for instance, Mr. W. S. Davidson, an English merchant, visited Canton in the year 1807 and subsequently traded in Canton, on his own account and as agent of English firms, for eleven consecutive years (1811 to 1822), under a Portuguese certificate of naturalization, which he had obtained without fee in London, with the assistance of the British Ambassador to Brazil. Many others followed the example of Mr. Davidson.

The renewal of the East India Company's charter, in 1813, made no great difference in the conduct of its Chinese trade. But as the Company was from that date compelled to publish its commercial accounts separately from its territorial accounts, British merchants generally became aware of the profitable aspects of trade with China. Moreover the public press now began to undermine the Company's monopoly by suggesting on sundry occasions that trade with the East would be carried on more profitably by private merchants than by the Company. But the antagonistic forces of Monopoly and Free Trade, thus evoked, took years to gather strength for a final struggle.

The earliest pioneer of British free trade in Canton was Mr. William Jardine, founder of the still flourishing firm of Jardine, Matheson & Co., who visited China off and on between the years 1802 and 1818, and resided in Canton continuously from 1820 to January 31, 1839. Next in time and influence came W. S. Davidson (referred to above), R. Inglis of Dent & Co. (1823 to 1839) and the brothers A. Matheson (1826 to 1839) and J. Matheson (of whom we shall hear more anon). The Mathesons exercised particular influence, as so long ago as 1827 they established in Canton a weekly newspaper, the 'Canton Register,' to disseminate the principles of free trade and to oppose a prolongation of the East India Company's monopoly. To this paper Charles Grant referred (some time before 1836) in the following memorable words: 'The free traders appear to cherish high notions of their claims and privileges. Under their auspices a free press is already maintained at Canton; and should their commerce continue to increase, their importance will rise also. They will regard themselves as the depositaries of the true principles of British commerce.'

During the three or four years that preceded the expiry of the East India Company's Charter, it was already foreseen by the free traders, who were staunch advocates of the Reform Bill of 1831, that the Company's monopoly was not likely to be renewed by a Reformed Parliament. The officers of the Company themselves had the same apprehensions and gradually relaxed its rules against the admission of private interlopers at Canton. Happily, before the question of renewing the Company's Charter had to be decided, the first Reform Bill swept away those rotten boroughs which would have enabled the well-organized band of monopolists in the House of Commons, aided and abetted as they were by the ignorance or indifference as to all questions of Eastern trade which distinguished the vast majority of honourable members, to crush the few scattered advocates of commercial freedom. It was the first Reformed Parliament that fulfilled the hopes and realized the prophecies of the British free traders at Canton, stripped the East India Company of its commercial attributes, delivered the China trade from the thraldom of monopoly, and thereby paved also the way for its eventual liberation from the tyranny of Chinese mandarindom.

Thus it happened that, even before the final expiration (A.D. 1834) of the Company's Charter, free trade cheerily began to rear its head at Canton. A new impetus was thereby given to British trade, and in the year 1832 as many as seventy-four British ships arrived at Canton. The little band of high-spirited, highly-educated and influential private merchants, that gathered at Canton during the closing years of the East India Company's monopoly, were, by their very position, ardent advocates of free trade and determined opponents of protection and monopoly in every shape or form. Some of them removed in later years to Hongkong and the spirit of free trade that filled them descended as a permanent heirloom to the future merchant princes of Hongkong. If the experiences of the East India Company negatively paved the way for the future Colony by demonstrating the irreconcilable antipathy of the Chinese against any equitable intercourse with Europeans, and the impossibility of conducting trade on a basis of international self-respect at Canton, this little band of free traders, the Jardines, the Mathesons, the Dents, the Gibbs, the Turners, the Hollidays, the Braines, the Innes, unconsciously did for the future Colony of Hongkong what subsequently Cobden did for Manchester, and prepared the public mind for future free trade in a free port on British soil in China.

When, as above mentioned, the Select Committee of the East India Company at Canton descended to the lowest step of degradation and handed the keys of the British factory to the Chinese Constabulary (May 27, 1831), the free traders, filled with righteous wrath, rushed to the front with the first of those public meetings which, in subsequent years, became such a characteristic means of venting public indignation in Hongkong. On May 30, 1831, this first public meeting of British subjects in China was held, under the presidency of William Jardine, and solemnly resolved to remonstrate against the policy of the Select Committee of yielding to the caprice of the Native Authorities and 'to appeal to the home country.' But the public mind of that dear country was by no means ripe yet for an unbiassed understanding of the real grievances and needs of the China trade, and the next advices from London informed the free traders of Canton (April 31, 1832), then smarting under a new order of the Hoppo positively forbidding' foreign ships to remain at Lintin (April 11, 1832), that general apathy prevailed in England as to the restrictions and interruptions or hardships of the China trade.

However, the hated monopoly of the East India Company at Canton finally ceased and determined on April 22, 1834, and the chagrin felt at the discovery that the East India Company, though closing its factory at Canton, left behind a Financial Committee for brokerage purposes, was almost forgotten in the general rejoicing over the first private British vessel, the ship Sarah, that openly sailed from Whampoa for London as the pioneer of the new free trade.

Vaticinations, principally originating with the servants of the East India Company, were not wanting that under the Company's regime British trade with China had reached its zenith and was bound to decline henceforth. It was asserted in Parliament that China offered no further outlet for British goods and that, by throwing open the trade to all comers, things would go from bad to worse. But the free traders had a better insight into the inner workings of the trade movement. They confidently predicted a great development of British trade to set in at once and history verified their expectations.

A few of these free traders were even keen enough to foretell (April, 1834) that the Act of King William IV., by which he abolished the exclusive rights of the East India Company, 'would aid very much in hastening the abolition of the long cherished exclusive rights of the Celestial Empire.' All may not have seen this at the time, but all were aware that a new period in the history of British trade with China was inaugurated thereby. It required, indeed, no prophet's vision to foresee that the inherent difficulties of commercial intercourse with the Chinese were considerably accentuated by the substitution of free trade for monopoly.

But the spirit which moved the British Parliament to wrench asunder the shackles in which British trade had been kept for two long centuries by the East India Company, was the potent spirit of free trade, and in this general free trade movement we see above the dark horizon the first streak of light heralding the advent of the future free port of Hongkong.