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WORKING DRAFT: NOT TO BE CITED WITHOUT PERMISSION

China Trade Roots of the Knowledge Economy


The great American China trade fortunes were built through the private
collection and use of knowledge. These fortunes were next invested in the United
States, notably in railroads and manufacturing. These technological ventures required
an educated workforce -- and public -- for success. Thus, at much the same time as
these private investments were made, individual China traders made a series of crucial
early investments in libraries and schools, supporting key institutions that helped build
an educated nation. Investments in institutions of public knowledge provided practical
support to private investments in a complicated economy. These investments in public
knowledge have long paid rich dividends to the American nation and public.

1. Trade with China, in the eighteenth and early nineteenth centuries, is


famous for having created merchant fortunes, in the West and in China.

2. Great wealth was indeed created, and was celebrated in the West and
China. The popular obsession with trade success stories has contributed to an amnesia
as concerns failure. Although the poet Chu Dajun (1630-1696), for example, famously
wrote that silver piles up in the thirteen hongs (of Canton), the vast majority of the
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Chinese merchants who conducted this monopolized trade ended up bankrupt. John 2

Murray Forbes (1813-1898), one of the top American traders, looked back on all of the
investments he had made during what is considered to have been the heyday of the
trade and doubted they yielded a six percent return on average. Speaking of American
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trade through 1840, Tyler Dennett, a great historian of American relations with Asia,
stated that it is obvious that American commercial relations with China were valued
not so much because of their present returns as for their future possibilities. 4

3. The China trade thus had its winners and losers. What characterized its
winners? The success stories of the China trade commonly involve the meticulous
collection, analysis and use of knowledge. Modern examples of information obsession,
such as hedge fund types who amass data concerning markets, companies, or products,


1
White, Hong Merchants, pp. 15-16; An-yun Sung, A study of the Thirteen Hongs of
Kuangtung; A Translation of Parts of the Kuangtung Shih-San-Hang Kao of Liang Chia-Pin
(M.A. thesis, Univ. of Chicago, 1958), pp. 24-5 and 73 (the poem is included in Chu's poems on
Canton, the Guangzhou Zhuzhici).
2
Kuo-tung Anthony Chen, The Insolvency of the Chinese Hong Merchants 1760-1843
(Nankang: Institute of Economics, Academia Sinica, 1990).
3
My trade operations since I began business when a boy in Canton, or, if you take a fairer test,
since I returned from China, in 1837, have not averaged over six per cent. interest on the
amount invested, if you take out the first lucky hit of the Acbar by being out during the China
war, and the very nice tea speculation to England that was made for me at the same time.
Without these two operations I am sure my profits have not been over six per cent., and I am
inclined to think that with them they would not be much over six. Sarah Forbes Hughes, ed.,
Letters and Recollections of John Murray Forbes (Cambridge: The Riverside Press, 1899), Vol. I,
p. 116 (italics in the original).
4
Tyler Dennett, Americans in Eastern Asia (New York: The MacMillan Co., 1922), p. 75.
represent a continuation of a well worn path to success. The private collection and
exploitation of commercially useful information has an ancient history, as seen for
example in the handwritten Fugger newsletters of the sixteenth century. This practice
was early protected in the United States by the Supreme Court in Laidlaw v. Organ, 15
U.S. 178 (1817). The term knowledge economy is of recent vintage, but the practices
denoted by this expression reach far back in time and long distances across the globe.

4. The most successful American China traders meticulously collected and


used information. John Perkins Cushing at Canton studied markets and products in
great depth and built a large fortune. Stephen Girard in Philadelphia also carefully
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studied the markets in which he was engaged, providing precise written instructions to
his Canton agents (as was common). A group of interconnected families, known at
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Canton as the Boston Connection, built lasting wealth both through deep knowledge
of trade and strong personal connections from Canton, to London, and worldwide.
Confidential business information flowed easily among people who knew and had
confidence in each other. For its part, the government of Qing China understood the
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commercial importance of knowledge, especially as concerned valuable Chinese export


products. State policies that centered foreign trade at Canton (far from the tea districts),
prohibited foreign communication with inland producers, and barred instruction in
Chinese language (on pain of death), were designed at least in part to frustrate what
might today be considered commercial espionage. Nonetheless, after years of effort,
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the British finally obtained and exported live tea plants from China.

5. Relics of these trading voyages are sometimes described as exotic, or even


curiosities. Some traders may have thought of articles gathered in trade as exotic, but
few of the winners did. Portraits and tokens of esteem cemented relationships across
the seas, typically conducted by intermediaries (supercargoes and captains) between
principals who never met. Articles brought home to an American sedentary merchant
(such as Girard) helped him better understand the distant persons and the unfamiliar
cultures and markets with which he was doing business. Some of this material might
best be understood as in the nature of market research. Of such research, some bears
fruit and some does not. Trading knowledge amassed by early American merchants is
found in archives, to some extent, but the great bulk of their learning died with them.
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Many of the objects they gathered have survived. Much of this material, now found in
museum cabinets, was gathered for practical purposes. William Sturgis, a prominent
Canton trade merchant, did business with native Americans on the Northwest Coast.
Years later, when he represented Boston in the Massachusetts legislature, one of the

5
Jacques M. Downs, The Golden Ghetto: The American Commercial Community at Canton and
the Shaping of American China Policy, 1784-1844 (Republication, Hong Kong: Hong Kong Univ.
Press, 2014), pp. 151, 157 and 159-160; John R. Haddad, Americas First Adventure in China
(Philadelphia: Temple Univ. Press, 2013), p. 43.
6
See Jonathan Goldstein, Stephen Girard's Trade with China 1787-1824: The Norms Versus the
Profits of Trade (Portland, Maine: Merwin Asia, 2011), pp. 64-68.
7
Downs, Golden Ghetto, pp. 155-160 and 367-369.
8
See Frederic D. Grant, Jr., The Chinese Cornerstone of Modern Banking: The Canton Guaranty
System and the Origins of Bank Deposit Insurance 1780-1933 (Studies in the History of Private
Law, Martinus Nijhoff Publishers, Brill, 2014), pp. 72 and 77-78.
9
See Lyman H. Butterfield, Bostonians and their Neighbors as Pack Rats, The American
Archivist, Vol. 24, pp. 141-159 (1961).

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professional orators of that body got off a long Greek quotation. Captain Bill replied in
one of the Indian dialects of the Northwest Coast, which he explained, was much more
to the point, and probably as well understood by his colleagues, as that of the honorable
and learned gentleman. He possessed this linguistic skill because it was of concrete
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importance to the foreign trade in which he was engaged. That it made him witty, was
but a side benefit. Language facilities were part of the considerable body of knowledge
that Sturgis, and others, gathered while doing business across the Pacific.

6. The period 1784 to 1843 was the heyday of the early American China trade.
The United States of America, Qing China, and the trade itself each changed markedly
during this sixty year period. The knowledge and skills required for success changed
with the trade. Markets shifted, wars gave rise to losses and to opportunities, opium
trades (with Turkey and with India) rose and fell, and the players changed. In 1784, the
United States was new to a complex and venerable trade. As of 1843, the Americans
were influential veterans. In the early years, merchants from various port cities on the
American east coast did business with China, without clear dominance by any one.
Boston was important, but not as a destination for inbound cargoes. In time, the contest
for preeminence was joined between Philadelphia and New York, and resolved in favor
of the Port of New York. It is curious that the New York China trade has received little
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scholarly attention, despite its importance. The articles of trade also evolved, shifting
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slowly from premium to bulk commodities. This change is exemplified in the declining
importance of tea, formerly king of the trade and the clipper ship, and the rise of the
United States export ice trade. The first fresh New England apples reached Canton in
1846, packed in with a shipment of ice. 13

7. It is well known that many China trade fortunes were invested in the
United States economy. Having accumulated capital, the China traders found better
opportunities close to home. Industry, railroads and infrastructure required money,
and provided good diversified uses for repatriated funds. Some China traders retired
and became passive investors. Others became prominent active investors. John Murray
Forbes, who went to China at seventeen and developed the confidence of the richest
private businessman in the world, Wu Bingjian (Howqua II), became a very successful
investor, on his own and in managing sizeable funds entrusted to him by individuals
including the Wu family. Forbes (the great-grandfather of Secretary of State John
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10
Samuel Eliot Morison, The Maritime History of Massachusetts 1783-1860 (Boston: Houghton
Mifflin Co., 1921), p. 69; Downs, Golden Ghetto, p. 414 n.27.
11
Downs, Golden Ghetto, p. 377 (In any case New York had outdistanced Philadelphia as an
entrepot well before the War of 1812, and by 1820, it was clearly the most important China trade
port in America.).
12
Downs, Golden Ghetto, p. 377 (New York City, oddly enough, needs more exploring.). This
want may reflect the magnitude of the task, and the fact that the records of some key firms are
not known to have survived.
13
Edward Delano Diary, 1846, Delano Family Papers, Franklin D. Roosevelt Presidential Library.
14
Downs, Golden Ghetto, pp. 82, 152, 237 and 239; Arthur M. Johnson and Barry E. Supple,
Boston Capitalists and Western Railroads (Cambridge: Harvard University Press, 1967), pp. 23-
27 and 185-186; Duncan Yaggy, John Forbes: Entrepreneur (Ph.D. diss., Brandeis University,
1974); Forbes, John Murray, Dictionary of American Biography (Allen Johnson and Dumas
Malone, eds.; New York: Charles Scribners Sons, 1931), Vol. 6, pp. 507-508. See Frederic D.

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Forbes Kerry) and his associates employed methods and connections developed in
China to construct and manage the Michigan Central and the Chicago, Burlington and
Quincy railroads. 15

8. Jacques Downs, the great historian of the American China trade, noted a
tendency among China traders to support libraries. Because China traders were not,
as a group, noted for their philanthropy, at least no more so than other merchants, their
interest in libraries is more noticeable. Downs is correct, but the scope of their interest
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was far greater, encompassing libraries, schools and other cultural institutions.

Having used knowledge to build trading fortunes, leading American


China traders supported both the nation and their ongoing domestic investments by
contributing to institutions of public knowledge. Some prominent examples are:

The New York Public Library (John Jacob Astor)

John Jacob Astor of New York City (1763-1848) was the first American
multi-millionaire. His major role in the Northwest Coast fur trade which produced
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cargoes for China is celebrated in the colorful ceramic beaver plaques seen in the
Astor Place subway station. Astor traded in teas and other Canton products, and was
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heavily involved in the Turkey opium trade through the Chinese crackdown of 1821. 19

Astor is said to have netted $200,000 in profits on the 1808-1809 voyage of the Beaver,
which President Jefferson permitted to sail despite the Embargo in order to facilitate the
return to China of a (dubious) Mandarin. The voyage was notorious, with Astors
Chinese passenger rumored to have been a common Chinese dock loafer. The story
of Punqua Wingchong who seems to have been a Cantonese small trader or
outside shopman-- who was seen on Nantucket, in New York, presented himself in
Washington, D.C., and sailed to China on Astors vessel has not been adequately
disentangled. Who this man was, why he was in the United States (evidently more
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than once), how and with whom he traveled to America, and his connections to Astor
all need better explanations. As a tragic sidelight, a Chinese man known as Quak Te
committed suicide in 1809 on Nantucket. Quak Te is said to have been a servant to


Grant, Jr., Hong Merchant Litigation in the American Courts, Proceedings of the
Massachusetts Historical Society, Vol. 99, pp.44-62 (1987), pp. 44-5.
15
Downs, Golden Ghetto, pp. 252 (quoted text) and 233 (a number showed their cultural
inclinations in their philanthropy).
16
Downs, Golden Ghetto, p. 237.
17
Downs, Golden Ghetto, p. 415 n.43 (estimates of his fortune vary from $8 million to $25
million.).
18
https://en.wikipedia.org/wiki/New_York_City_Subway_tiles
19
Downs, Golden Ghetto, pp. 106, 120, 123, 201); Charles C. Stelle, "American Trade in Opium to
China, Prior to 1820," Pacific Historical Review, Vol. 9, pp. 425-444 (1940), p. 440 (Astors
speculations in opium were great enough to cause J. and T.H. Perkins to state in 1818, We know
of no one but Astor we fear, . . . ) (italics in the original).
20
Dael Norwood, Trading in Liberty: The Politics of the American China Trade, c. 1784-1862
(Ph.D. Diss., Princeton University 2012), pp. 150-161.

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Punqua Wingchong, who was left behind on the island (where it is rumored Punqua
Wingchong went for deportment training before traveling to Washington, D.C.). 21

The New York Public Library. John Jacob Astor employed Joseph
Cogswell to build the great public Astor Library, which opened in 1854. The library
was intended to serve as a public educational resource. With the historian George
Bancroft, Astors librarian Cogswell had earlier been a founder and schoolmaster of the
famous Round Hill School in Northampton (1823-1834) (modeled after European
secondary schools). The Astor Library was consolidated with the Lenox Library and
the Tilden Foundation in 1895 to become the New York Public Library. 22

Girard College (Stephen Girard)

Stephen Girard of Philadelphia (1750-1831), who traded extensively with


China and named several of his ships after French philosophers, was the wealthiest
man in the United States at the time of his death. Girard was heavily involved in the
sale of opium from Turkey in China, but discontinued that business in the wake of the
Chinese enforcement efforts of 1821. 23

Girard College. Almost all of Girards estate passed by will to charitable


and municipal organizations. About half went to found Girard College in Philadelphia,
as a boarding school for poor, white, male orphans. The Girard Will has twice been
the subject of leading decisions of the United States Supreme Court. In Vidal v. Girards
Executors, 43 U.S. 127 (1844), the Will was upheld over the objections of French relatives
of the deceased. Over a century later, in Pennsylvania v. Board of Trusts, 353 U.S. 230
(1957), the Court held the refusal to admit black students to be a violation of the 14th
amendment to the U.S. Constitution. Girard College remains a boarding school today. 24

The Boston Public Library (Joshua Bates)

Joshua Bates (1788-1864) was one of the two early American partners of
Baring Brothers, a British firm that provided substantial financing to many leading
American China traders and financed the Louisiana purchase by the United States.


21
Frances Ruley Karttunen, The Other Islanders: People Who Pulled Nantuckets Oars (New
Bedford: Spinner Publications 2005), p. 146.
22
Cogswell, Joseph Green, Dictionary of American Biography (Allen Johnson and Dumas
Malone, eds.; New York: Charles Scribners Sons, 1930), Vol. 4, p. 273; Downs, Golden Ghetto, p.
123; John S. Bassett, The Round Hill School, Proceedings of the American Antiquarian Society,
vol. 27 (New Series), pp. 18-62 (1917), p. 53. The China trader John Murray Forbes attended and
was greatly influenced by the Round Hill School and Cogswell and Bancroft as teachers before
he left for China at seventeen years of age. John Murray Forbes, Reminiscences of John Murray
Forbes (Sarah Forbes Hughes, ed.; Boston: George H. Ellis, 1902), Vol. I, p. 73.
23
Goldstein, Stephen Girard's Trade with China; Jonathan Goldstein, Philadelphia and the
China Trade (University Park: Pennsylvania State Univ. Press, 1978), pp. 35 and 44; Downs,
Golden Ghetto, pp. 112, 115, 120, 123, 254 and 415 n.43.
24
http://articles.philly.com/2014-08-27/news/53248646_1_city-trusts-girard-students-
boarding-school

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Joshua Bates credited Thomas H. Perkins with having given him a start in business, and
had close ties with the families known as the Boston Concern. 25

The Boston Public Library. In October of 1851, writing from London,


Bates offered $50,000 for the purchase of books for the citys new public library, "the
building shall be such as to be an ornament to the City, that there shall be a room for
one hundred to one hundred and fifty persons to sit at reading tables, and that it be
perfectly free to all." Bates made two gifts of $50,000 to the library. An oil portrait of
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Joshua Bates hangs today at the end of the magnificent Bates Hall, in the (older) McKim
Building of the Boston Public Library.

Princeton University, Lawrenceville Academy (John Cleve Green)

A forceful individual, John Cleve Green (1800-1875) transformed Russell


& Company during the 1830s into the leading American trading house at Canton.
Jacques Downs, preeminent scholar of the American China trade, describes Green as
businesslike. He chastely avoided all personal remarks and occasionally even took
others to task for their lack of the same restraint. Greens own correspondence is
invariably short, to the point, and suffocatingly dull. 27

Princeton College and Lawrenceville Academy. Greens children died


young. In retirement, and in his bequests, Green focused on philanthropy, giving
generously to Princeton College, to the Princeton Theological Seminary and to the
Lawrenceville Academy. His donations to Princeton College are said to have amounted
to upwards of a million and a half, perhaps two million dollars.'' 28

The Boston Athenaeum, The Perkins School for the Blind


(Thomas Handasyd Perkins and James Perkins)

Thomas Handasyd Perkins (1764-1854) and James Perkins (1761-1822),


whose commercial education began with instruction from their mother the widow
Perkins, operated the leading Boston China trade firm of J. & T. H. Perkins & Co. and
were core members of the Boston Concern. The Perkins brothers were uncles of and
the initial employer of John Murray Forbes. Their firm was active in the Northwest
Coast fur trade, was heavily involved in opium, and invested in the notorious Astor-led
1808 voyage of the Beaver. That venture yielded them a tidy $113,000 profit on the July
1809 auction sale of one of the few return cargoes to reach the United States on a ship
that sailed during the Embargo. 29


25
Downs, Golden Ghetto, pp. 111, 155, 170, 186, 196 and 367-369.
26
http://www.bpl.org/central/bates/bateshall.htm
https://www.bpl.org/central/bates/batesletter.htm
https://www.bpl.org/general/founders.htm
27
Downs, Golden Ghetto, pp. 54 (quoted text), 55, 95, 168-71, 173 and 224.
28
Downs, Golden Ghetto, p. 254;
http://etcweb.princeton.edu/CampusWWW/Companion/green_john.html
29
Downs, Golden Ghetto, pp. 106, 116, 119, 123-124, 150-156, 224, 237; Dael Norwood, Trading
in Liberty, p. 156 n.108.

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The Boston Athenaeum. The Perkinses were important early supporters
of the Boston Athenaeum, originally a practical working library with a chemistry
laboratory on the premises. The portraits of both brothers hang in the library today. A
magnificent life size portrait of Thomas Handasyd Perkins by Thomas Sully dominates
its first floor. 30

The Perkins School for the Blind. James and Thomas Handasyd Perkins
were founders and important supporters of the Perkins School for the Blind. 31

Other Gifts to Schools and Libraries

Milton Academy. John Murray Forbes (1813-1898) was a driving force


behind the 1884 refounding of Milton Academy, which had become decrepit. Forbes
took as inspiration the Round Hill School he attended as a boy under schoolmasters
George Bancroft (later a great historian) and Joseph Cogswell (later Librarian of the
Astor Library). 32

The Peabody Essex Museum. The Peabody Essex Museum holds


important material originally donated by Salem China merchants to the East India
Marine Society, a predecessor institution. As their donations were generally of objects
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rather than funds, the East India Marine Society went through periods of hardship, but
its successor is fortunate to hold original objects and records which are of world-class
significance but are little celebrated within its walls. 34

The Ipswich Public Library. Augustine Heard (1785-1868), a prominent


China trader and founder of Augustine Heard & Co., one of the two great American
China coast firms of the nineteenth century, strongly supported his local library. He


30
Downs, Golden Ghetto, p. 252;
https://www.bostonathenaeum.org/about/publications/selections-acquired-tastes/james-
perkins-1822-gilbert-stuart
http://www.philanthropyroundtable.org/almanac/hall_of_fame/thomas_perkins
https://en.wikipedia.org/wiki/Thomas_Handasyd_Perkins
31
Downs, Golden Ghetto, p. 253;
https://www.bostonathenaeum.org/about/publications/selections-acquired-tastes/james-
perkins-1822-gilbert-stuart
http://www.philanthropyroundtable.org/almanac/hall_of_fame/thomas_perkins
https://en.wikipedia.org/wiki/Thomas_Handasyd_Perkins
32
Richard W. Hale, Jr., Milton Academy 1798-1948 (Milton: Milton Academy, 1948), p. 30; J.M.
Forbes, Reminiscences of John Murray Forbes, Vol. I, pp. 68-84; S. Hughes, ed., Letters and
Recollections of John Murray Forbes, Vol. I, pp. 37 and 46.
33
https://en.wikipedia.org/wiki/East_India_Marine_Society
http://babel.hathitrust.org/cgi/pt?id=mdp.39015056996500;view=1up;seq=192
34
Paul A. Van Dyke, Merchants of Canton and Macao: Politics and Strategies in Eighteenth-
Century Chinese Trade (Hong Kong: Hong Kong Univ. Press, 2011), p. 197 (all that remains
from Yanqua's glory days in the trade is a life-sized image of him in the Peabody Essex
Museum. . . . According to legend, Yanqua placed his own clothes on the image.). The
image of Yanqua -- one of only two hong merchants who were able to withdraw their funds
from trade and retire from the hong guild is in storage and has not been seen by the public in
many years.

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contributed forty thousand dollars, selected the plans for the building, determined
library policy, and chose the original trustees. 35

The Brooklyn Female Academy, The Brooklyn Public Library. Abiel


Abbot Low (1811-1893), a China trader who came home with $150,000 and went on to,
among other things, serve as President of the New York Chamber of Commerce,
supported the Brooklyn Female Academy (later the Packer Collegiate Institute) and the
Brooklyn Public Library. 36

Frederic D. Grant, Jr.


New York City, 23 October 2015


35
Downs, Golden Ghetto, pp. 197 and 252 (quoted text).
36
Downs, Golden Ghetto, pp. 85 and 172.

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