Importance of Foreign Trade after the Revolution
The world that the former British colonies entered as the newly independent
United States was one in which countries closely controlled their domestic and
international economies. European countries had been practicing mercantilism
from the 16th century on as each of them worked to become more powerful than
its neighbors and competitors. Wealth in the coffers of the government was the
source of power, and to insure capturing as much wealth as possible, the nation/kingdom
became the center of a fairly closed trading network which included colonies
that provided raw materials.
The economy of the American British colonies at the time of the revolution
was extractive. Natural materials such as lumber, fish, rum were harvested and
within the British empire. Manufacturing and other kinds of trade were prohibited
by the Navigation Act of 1651 and subsequent legislation. North American British
colonials were thus required to purchase Asian goods through England rather
than engaging in an independent Asian trade. One of the contributing causes
of colonial unrest was the exclusion of Americans from what was seen in the
colonies as a very lucrative China trade.
The demand for Chinese products—tea, porcelain, silk, and nankeen (a
coarse, strong cotton cloth)—continued after the Revolution. Having seen
the British make great profits from the trade when the colonies were prevented
trade with China, Americans were eager to secure these profits for themselves.
The need to provide employment for people who had depended on the sea for their
livelihood, the need to continue importing manufactured goods as yet unavailable
from American sources, and the need to generate capital for development stimulated
the development of a new kind of foreign trade. Direct trade with China was
part of this trade. With the volume of foreign trade relatively small during
the early years of the Republic, trade with China played a significant role.
Ships from Philadelphia, New York, Boston, and Salem were the most active
in the new China trade. The immediate difficulty which all traders faced was
find commodities to sell in China to offset American purchases in China that
were mostly paid for in silver shipped from the Americas to China. Traders from
these different American ports settled on different commodities and followed
different routes to China to obtain these commodities. In general, all traders
engaged in the serial trading of goods, buying and selling in all the ports
Traders from Philadelphia first sent their ships across the Atlantic Ocean
to buy and sell goods in Europe. They then traded around Africa and across the
Indian Ocean to China. Around 1810, Philadelphia merchants found a source of
opium in Smyrna (Turkey) and they began to ship this commodity to China. However,
they continued to ship other goods as well. Ships from New York seem to have
engaged in a broad range of trade strategies available and in the mid-19th century,
New York became the major port involved in the China trade.
By the 1830’s, trade routes were well established between the United States
and China, and the names of ports in the Eastern hemisphere, once exotic and
mysterious, were becoming increasingly familiar to Americans as places of importance
to the United States’ economy.
Commodities of the Trade
Tea was the most important imported commodity Americans obtained from China
through the end of the 19th century. Initially, American imports from China
largely consisted of cloth (nankeen and silk) as well as tea. Tea became the
dominant commodity, expanding from approximately 36% of the total imports from
China in 1822 to 65% in 1860.
Textile imports declined during the 1830s. Silk imports declined although
the reason is uncertain. As cotton textile manufacturing developed in the 1820s
and the quality of domestic cloth rose and the cost decreased, the U.S. stopped
importing nankeen and began to export cotton cloth to China. Machine-spun cloth
did not have comparable quality to the homespun, hand-woven nankeen which the
Chinese continued to prefer for work clothes. It was not until the middle to
the end of the 19th century that western-manufactured cloth provided the serviceability
for a comparable price as did Chinese-produced cloth. At that time western cloth
began to be imported into China in increasing quantities. By the last quarter
of the 19th century, cotton cloth and cotton yarn represented a significant
portion of the total American exports to China.
Americans initially looked to ginseng as the commodity which would finance
trade with China. This market quickly turned out to be very volatile. Furs also
promise, but this market also proved to be undependable. Without a commodity
which consistently found a market in China, the Americans had to use specie
(metal and coins) to finance the trade. Without a source of gold or silver,
Americans had to obtain specie elsewhere. They did this by engaging in a triangular
trade. Goods were shipped to Europe, between European ports, or to South America
and sold for Mexican dollars. The specie was then shipped to China to purchase
tea. By the 1830s, a significant amount of the trade was financed by credit
extended by London banks through their representatives in China.
Some Americans also turned to opium as a commodity to finance the China trade.
India produced the highest quality opium, but the British East India Company
held a monopoly on opium production in India until 1831. Turkey produced opium
of lesser quality and on a far smaller scale than India. Americans began shipping
opium from Smyrna by 1805. Turkish opium only made up a small part of the total
opium imported into China. Opium did not become an important commodity in American
trade with China until the 1830s when it made up approximately 1/4 of the total
that Americans sold in China. Opium imported by Americans never exceeded 10%
of the total opium imported into China.
Despite all these attempts to find a commodity other than specie that could
balance the cost of goods imported from China, Americans could not find one.
Differing Views of Trade
To understand why Westerners had a difficult time finding goods which the
Chinese consistently wanted to buy, it is necessary to look both at the economics
ideas about trade. The Chinese economy at the end of the 18th century was quite
well developed. Goods that could not be produced locally were supplied from
other sources within China. The size, diversity, and the degree of integration
of the Chinese empire provided its inhabitants with necessities and its elite
with many luxuries. The goods which the West originally offered the Chinese
were luxury items, the market for which was soon oversupplied. At that time,
over 90% of the Chinese population lived on the land and most of them lived
a hand-to-mouth existence.
The West wanted the tea which China produced and believed that it had the
right to trade for it. Trade was seen as the means to expand national and personal
wealth, so it was assumed to be natural that every one and every country would
take part in trade.
The Chinese, on the other hand, had a traditional theoretical disdain for
commerce. In Confucian thought, society was divided into four social classes—ranked
from high to low—scholars, peasants, artisans, and merchants. The first
three groups were seen to produce something, while merchants were seen as making
a profit without producing anything. Nevertheless, commerce developed in China
to a high degree, but it was not protected by law and always subjected to governmental
demands for “contributions.”
Traditional China did also take part
in some foreign trade through its history, but it was cast in terms of largess
by the Emperor in return for tribute paid
by states or tribes which acknowledged Chinese suzerainty. These ideas were
very much a part of the Chinese mind-set when the West approached at the end
of the 18th century and remained unchanged for most Chinese into the 20th century.
Given these two very different approaches and ideas about commerce, it is
easy to see why conflicts developed.
Ships of the Trade
In the years following the American Revolution, speed was the most important
consideration for ships. Sailing ships tended to be small and swift so that
they could outrun and outmaneuver the British, French, and pirate vessels that
tried to capture American ships. A ship like the Empress of China (the first
American ship to trade in China), was only sixty-five feet long and twenty-five
feet wide below the deck. Living quarters, the ship’s provisions, ballast,
and cargo all shared this space. These small vessels made the trip around the
globe with a cargo equivalent to that carried in two or three railroad boxcars.
Larger sailing ship in the 1820’s and 1830’s could carry 400 to
500 tons of cargo, equivalent to about eight railroad boxcars, but still very
little compared to today’s modern container ships that can carry 50,000
Sailing ships were built larger through the 1830s, 40s, and 50s, as longer
trade routes became routine and the threat of pirates diminished. From 1841
1860, “extreme clippers” dominated the trade to Asia. These ships
were large, carrying huge, lucrative cargoes of tea, spices, textiles, and chinaware
to consumers in America and Europe. In the 1860s, while the United States was
embroiled in a civil war, European-manufactured steam-powered ships came to
dominate the ocean trade routes.
Changes in the Trade
During the decades preceding and during the Civil War, the United States was
largely focused on domestic matters and sectionalism rather than foreign policy.
But it was also during this time that Americans, who had spent most of their
history looking towards the East Coast and Europe, would begin to see the strategic
and economic importance of developing the West Coast and maintaining shipping
routes to the Far East.
During the late 1850’s, the United States’ trade
with China declined. Domestic manufactures produced in factories in the rapidly
states were replacing imports: cotton replaced nankeen, American pottery factories
replicated Chinese designs on porcelain, and coffee imported from Central and
South America was replacing Chinese tea.
The Civil War consumed the resources
of the American economy. Meanwhile, European shipyards surged ahead in the manufacture
of steam-powered vessels which quickly
came to dominate the ocean trade routes. The United States would not catch up
to Europe in this area until the 1880s and 1890s, by which time England, Spain,
France, Germany, and Russia had all gained a firm foothold in the China trade.
Despite the great profits that could be made in the China trade, Europe offered
a more receptive market for American goods and remained the primary focus of
America’s foreign trade. As U.S. foreign trade expanded during the 19th
century, trade with Europe grew enormously, while the China trade remained fairly
constant and became an even smaller percentage of total U.S. foreign trade.
American interests in the Pacific, however, continued to expand. California,
Oregon, and Washington became part of the United States. American missionaries
and then businessmen settled in the Hawaiian islands and successfully lobbied
for American rule. When the defeat of the Spanish fleet at Manila in 1898 provided
the opportunity to take control of the Philippines, American business lobbied
for American rule there. They believed that an American presence in the Philippines
would help American businessmen compete in China where foreign countries were
increasingly carving out areas of economic dominance (spheres of influence).
Mounting pressure on the U.S. government eventually resulted in the promulgation
of the Open Door Policy in 1899.
With the reopening of China to trade in the last quarter of the 20th century,
American businessmen have again approached China as a market with great potential.
This time, China is not adverse to trade but two factors – a population
with little disposable income and a governement that is protecting the development
of its economy – has led again to a significant trade imbalance and to
of how to deal with this issue.