Abstract

From Canton to the Coast: Reinventing the China-U.S. Tea Trade after the Opium War

This paper examines how Chinese and American merchants restructured the China-U.S. tea trade and its financial structure after the Opium War (1839-1842). Since the initiation of the direct tea trade between the United States and China in 1784, Americans had grown to be the second largest importer of tea from China. After the Opium War ended the Canton Trade System, which confined Euro-American traders in a single port, Canton, more Chinese trading ports, known as “Treaty Ports,” were open to foreign merchants. While British traders controlled the black tea markets in the Treaty Ports, Americans dominated the green and Oolong tea ports. The changing landscape of the tea trade also reshaped the measures to finance the transactions. Different from the stereotype of China’s foreign trade as a primitive system which relied primarily on silver or barter payments, this research highlights a sophisticated credit system that had buttressed the China-U.S. tea trade since the early nineteenth century. American and Chinese merchants employed credit instruments—promissory notes and bills of exchange—which were conventionally defined as techniques of capitalism to facilitate their de facto transactions. The Panic of 1837, the Opium War, and the unfamiliar Treaty Ports jeopardized merchants’ confidence in each other, so Chinese and American traders resorted to silver and the barter economy during the immediate postwar years. However, adapting to the new trading environment, Chinese merchant‑bankers issued newly invented promissory notes, named zhuangpiao, and native bills of exchange to streamline the transactions. Meanwhile, American companies employed the checks issued by their Chinese employees, known as “Compradors’ Orders,” to pay Chinese tea sellers. Hence, the notes, bills, and checks reconstructed the credit economy of the tea trade and formed a coastal exchange market across the growing number of trading ports in China in the latter half of the century.