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So Great a Profit So Great a Proffit HOW THE EAST INDIES TRADE TRANSFORMED ANGLO- AMERICAN CAPITALISM JA M ES R . F IC HT E R H A RVA R D U N I V E R S I T Y P R E S S Cambridge, Massachusetts & London, England 2010 Copyright © 2010 by the President and Fellows of Harvard College All rights reserved Printed in the United States of America Library of Congress Cataloging-in-Publication Data Fichter, James R. So great a profit : how the East Indies trade transformed Anglo-American capitalism / James R. Fichter. p. cm. Includes bibliographical references and index. ISBN 978-0-674-05057-0 (alk. paper) 1. United States—Commerce—Asia. 2. Asia—Commerce—United States. 3. United States—Foreign economic relations—Great Britain. 4. Great Britain—Foreign economic relations—United States. 5. Capitalism—United States—History. I. Title. HF3118.F53 2010 382.0973'05—dc22 2009050549 Dedicated to my father, the wisest man I know The American commerce to the East, will ere long rival England. —Independent Chronicle, Boston, MA, 1796 Contents 1 Introduction 7 1 Revolution 2 America Sails East 3 Commerce in a World at War 4 America’s Re-export Boom 5 Merchant Millionaires 6 Beyond the British Empire 7 The India Trade 8 America’s China and Paciic Trade 9 Death of the India Monopoly 10 31 56 82 111 149 173 232 American Capital and Corporations Conclusion 278 Archival Sources 291 Abbreviations 293 Notes 295 Acknowledgments 373 Index 375 205 252 Tanda Salempore Alliabad Chandernagore Serampore Surat Santipore Chinsura Calcutta Bombay Masulipatam Goa Glasgow Liverpool London Bremen Emden Jersey Island La Rochelle Bordeaux Madras Arcot Pondicherry Calicut Tranquebar Tanjore Cochin Mahé Genoa Livorno K Vellore Lübeck Hamburg Amsterdam Boulogne Paris Pulicat Copenhagen Kiakhta Kandy Ragusa Beijing Lisbon Barcelona Smyrna Xi’an Chengdu Malta Oudh Bengal an g e s R. Suzhou G a n Red lf Gu Sea Gujarat Hooghly R. Hyderabad ast Co bar Mala Yemen Mocha Mysore Travancore Ceylon Seychelles Canton Ava Rangoon Corom Coastandel Egypt si Per Suez Isthmus Macau Pangasinan Pampanga Cavite Jalajala Mindoro Nicobars E a s t I n d i e s Diego Garcia Agalega St. Helena Mozamb Comoros e iqu Mauritius/ Ile de France Rodrigues Port Louis Madagascar Réunion Mascarene Islands Cape Colony Stellenbosch Graaff-Reinet Cape Town Cape of Good Hope Tristan da Cunha Manila its Stra Aceh Jolo Zamboanga Sultanate of Sulu Celebes Sea Manado al of M Penang Malacca a cc a Sumatra Spice Islands/ Moluccas Amboyna Bangka Bencoolen Sunda Strait Java Sea Batavia Java Banda Is. Bali Timor Nagasaki Alaska Bering Sea Hudson Bay Sitka P Kamchatka ac if Unalaska ic Rupert’s Land N Nootka Sound or Lower Canada Gre a Québec New Brunswick Montréal Salem Nova Scotia Boston New York City Baltimore Philadelphia tL we Upper Canada akes th Astoria R. Columbia st California Charles Town New Orleans Ha w aii Veracruz Cuba Jamaica Acapulco i Sp a an is h Main Cumaná Demerara River Berbice River Cayenne y n e Essequibo River Surin s am La Guaira S e a s Nuka Hiva rqu esas Is. Ma S o u t h Potosí o l Fiji P Juan Fernandez Valparaíso Buenos Aires Montevideo St. Martin St. Bartholomew St. Thomas Cap Français Monte Cristi H i s p a n i o l a Port-auSantoDomingo Prince Léogane Saint Domingue Puerto Rico Falklands St. John St. Eustatius St. Croix Guadeloupe Marie-Galante Martinique St. Lucia St. Vincent Grenada Tobago Curaçao Trinidad Tierra del Fuego Cape Horn South Georgia Island So Great a Profit Introduction In 1784 the irst U.S. merchantman reached Asia. For such a new nation it was a ittingly small start. Less than three decades later, U.S. trade with Asia was greater than that of any other Western nation on earth, save Britain. How could this happen? Europeans had bought tea on the China coast for centuries, and now Americans were not simply appearing among the mix of Western traders in China but enjoying precipitous commercial success. Between 1793 and 1812, French, Dutch, and Danish merchants soon found themselves sailing in American wakes. At irst glance this seems incredible. But the trade raises questions that can tantalize the imagination. The trade grew quickly, only to be set back on its heels just as quickly again. Was this a twenty-year blip in history, or did this trade have long-term effects? Did it inluence the development of the United States? Did the shifts in global trade achieved by American merchants inluence the rest of the world? The simplest explanation for the growth of American trade in Asia credits the French Revolutionary and Napoleonic Wars—termed here the French Wars—for American commercial success. British warships kept French and French-allied merchants from the sea, and neutral traders from the United States took up the Continentals’ trade. U.S. merchantmen traficked between the Caribbean and Europe in an old and well-known story; surely developments in Asia were echoes of the same phenomenon—no more, no less. 2 . So Great a Profit Americans sailed to more places in Asia than China alone, and the French Wars can help explain the growing U.S. trade with these other parts of Asia as well. If Americans sailed so far to take up France’s trade with China, they might be willing to take up the carrying trade between French Europe and the French, Dutch, and Spanish colonies in Asia. Indeed, American trade in the French Indian Ocean colonies of the Mascarenes (roughly 500 miles east of Madagascar), in Dutch Java, in Dutch Southern Africa, and in Spanish Manila boomed during the French Wars. The boom was remarkable—quite so in some cases—and gives credence to the neutral-trade thesis. American trade also lourished in British Bengal, in the very heart of the British Empire in Asia. This success, too, could at least partly be credited to the French Wars—the East India Company certainly explained the Americans’ trade this way—with the Americans simply meeting French demand for Indian goods. And yet in Bengal the French Wars are a necessary but not suficient explanation, for the U.S. trade in Bengal was intimately connected with British merchants in Calcutta and in London. These connections, which the French Wars do little to explain, make it dificult to conceive of a discretely American trade with India as much as of an American trade abetted by British merchants, who were ostensibly the Americans’ competitors. U.S. merchants in India, and in Asia more generally, competed with the English East India Company for the carriage of goods between Asia and the Atlantic. Yet they worked with British merchants—Company directors, shareholders, and employees among them—to do so. How does one explain the bizarrely competitive and cooperative connections between the Americans so recently departed from the British Empire and the British traders now remaking that empire in Asia? Through these connections, U.S. trade to Asia between 1783 and 1815 transformed both the British Empire and the United States. Because of these connections it is dificult to consider American trade to Asia without its British counterpart, and so this book is not a history of American trade to Asia but of Anglo-American capitalism there. The far-reaching consequences of the trade suggest the deep links between the United States and the rest of the world Introduction . 3 from that country’s inception. They also yield a new understanding of the American relationship with the British Empire after American independence as well as new avenues of inquiry into the “great divergence” between east and west. China, India, the Mascarenes, and Southeast Asia constitute a vast array of ports and countries, each meriting study in its own right. And yet examining them together is essential because that was how early modern Americans and Europeans saw them: of a piece and as part of the great expanse of the world’s shore stretching from the Cape of Good Hope eastward to the Straits of Magellan and referred to as the East Indies. By the eighteenth century the East Indies included the Indian Ocean and the East Asian littoral, fading into the South Seas somewhere over what we would call the Western Paciic. “East Indies” was a vague term and made sense only from an Atlantic perspective—that is, Western and maritime— whereby however far Calcutta and Canton were from each other they seemed still ininitely closer to each other than to home, whether that home was London or Brest or New York. Eighteenth-century European empires were primarily Atlantic in focus, and Western governments regarded the Indies as a realm beyond. “Distant” had once meant “beyond the pale” or “beyond the line.” In the eighteenthcentury Atlantic it meant “beyond the Capes,” and to Atlantic men in the east, a term like “East Indies” thus made sense. In the minds of the American, British, and European merchants who traded to the Indies, China, Bengal, and the Mascarenes were all East Indian destinations. The East Indies were more than an abstract formulation. Each European East India Company had its own patent, making that Company the exclusive national merchant between the East Indies and the Atlantic and giving the East Indies economic deinition. As American independence ended British rule in one part of the world, it brought American merchants into competition with the English East India Company in another. Americans were not new to Asia: colonial American merchants had smuggled and pirated their way across the Indian Ocean in the early eighteenth century, and others had gone east legally with the East India Company. But after 1783 Americans went east as U.S. citizens, not British subjects. 4 . So Great a Profit This new U.S. commercial presence was greater, more sustained, and spread across more of the Indies than anything that had emanated from North America before. It also occurred in tandem with the recentering of the British Empire on the east. As a result, the English East India Company found itself with a new and vigorous competitor in Asia just as the Company itself was coming under greater scrutiny as the custodian not of a remote imperial backwater but of a growing imperial heartland. The rivalry was consequential: when Parliament revoked the Company’s monopoly on Indian trade at the end of the French Wars, many Members of Parliament pointed to the Company’s failure to deal with its American competition. Thus the American trade to the East Indies as a whole had repercussions for society, economies, and politics on both sides of the Atlantic. In Britain it helped end the East India Company’s monopoly on British trade to India and helped begin Britain’s nineteenthcentury free-trade empire there. In the United States it abetted the accumulation of wealth and inancial capital in the hands of the wealthiest Americans, creating inanciers who would profoundly alter the shape of American business. British merchants gained free trade, becoming more like their American counterparts, and American merchants gained capital and became more like their opposite numbers in Britain. Convergence between British and American trades to the east led to convergence between Britain and America at home. Thus the need to examine the East India trade in a global context. The convergence between British and American East India merchants occurred while the center of global economic activity was shifting from Asia to the North Atlantic. This shift was known as the “great divergence.” Historians offer various reasons for the divergence, including markets, European property rights, industrialization, and colonialism.1 Of these, industrialization is usually taken as the main cause of the North Atlantic’s rise, leaving capital to a supporting role at best.2 But capital was key. Capital, often in the form of specie (silver coin), was fundamental to American and British trade in Asia and to east-west interaction generally. The U.S. East Indies trade had effects out of proportion to its size, in Introduction . 5 part because of the role of capital. Recent scholars of the great divergence have missed this point by misunderstanding capital, failing to distinguish between paper money and ixed capital on the one hand and gold and specie—which were fungible and globally accepted—on the other.3 The early U.S. East Indies trade encouraged the capitalization that reoriented New England and the mid-Atlantic states in the world economy; it served as a marker for those who had specie in the early national U.S. economy; and it spurred reforms in British and, to a lesser extent, European trade links to the Indies, so that the global North was broader, more uniform, and more directly linked to the Indies, a region that was not yet but would soon become a center of the global South. The U.S. East Indies trade had diverse effects because it intersected at various points with European countries’ trade (and the inancing thereof) in Asia, particularly Britain’s. Despite the East India Company’s formal monopoly, British and American trade in Asia were, though fundamentally distinct, inancially interconnected: the global low of capital and global Anglo-American commercial networks could not help but link them. Likewise, the economic transformations of the nineteenthcentury Atlantic and of nineteenth-century Asia are distinct but related. Yet not just any characterization of their relationship will do. Though the great divergence occurred just as the Anglo-American east-west trade opened to well-capitalized private merchants, there is little evidence that these merchants opened trade to Asia solely or even primarily to export industrial goods. Once the east-west trade had been liberalized, however, it was certainly easier for merchants subsequently to export the industrial products of the North Atlantic. Capital is key here as well, since liberalization of eastwest trade in Britain and capital accumulation in the United States (and perhaps also in British outports) allowed merchants to exploit this divergence better. The ties among world history, U.S. history, and British imperial history are fundamental to understanding the transformation of the Anglo-American trades to the Indies. Therefore this book covers an array of subjects; British policymakers, American merchants, and corrupt French oficials all play their part. So, too, do creole 6 . So Great a Profit society in Java, Qing Chinese governance, and British policy in India. In passing among the histories of the United States, the British Empire, and the world, this book uses new and familiar sources. Shipping records from South Africa, Mauritius, India, Indonesia, the Philippines, St. Helena, and the United States; American and British merchants’ papers; French imperial correspondence; and less thoroughly examined portions of English East India Company records join the American State Papers series and more-familiar Company correspondence. Taken together, these sources reveal transformations in disparate places that were deeply interrelated. This book is arranged around the French Wars, which catalyzed the changes wrought by expanding Anglo-American connections. Chapters 1 and 2 consider the development of American trade to the Indies in the years 1783–1793, explaining how it functioned before the French Wars began. Chapters 3–8 examine the booming U.S. trade to the Indies during the period of the French Wars, 1793–1812, each chapter covering a different aspect of the U.S. East India trade in this period. The remaining chapters look at the longer-term effects of the U.S. East India trade after 1812 in both the British Empire and the United States. But before 1813, before these dual transformations, before the great divergence, and before the nineteenth-century convergence of British and American free-trade liberalism in Asia, there was an eighteenth-century separation between the two nations: the American Revolution. And so it is with the American Revolution, and with the Asian tea that was the source of so much trouble, that this story begins. S chapter one Revolution Some time after one in the morning, a “violent knocking at the Streetdoor” startled Benjamin Fanueil and his family from bed. Fanueil opened the bedroom window to ask what was the matter. A man answered back that he carried a “letter of great consequence,” something that could not wait for morning. He slipped it under the door.1 At “about one o’Clock” the same morning, Richard Clarke also woke to a “violent knocking at the door.” By moonlight he and his brother made out two men in the courtyard below. One held “a letter from the Country.” Clarke sent his servant to fetch it. Elisha Hutchinson woke to ists on his door that night, too. We have a letter, the callers told him, urgent. Fanueil, Clarke, and Hutchinson read: Boston Novr 1, 1773 The Freemen of this Province understand from good Authority that there is a Quantity of Tea Consigned to your house by the East India Company which is Distructive to the Happiness of every well wisher to his Country[;] it is therefore expected that you personally appear at Liberty Tree on Wednesday next at 12 o’Clock at noon day, to make a publick resignation of your Commission agreeable to a Notiication of this day for that purpose. Fail not upon your Peril.2 This was the irst in a series of events in which tea, though an Asian commodity, helped bring about American independence. 8 . So Great a Profit As a consequence, global trade would link the United States from its very beginning to the trade with Asia and, somewhat paradoxically, to the fate of Britain’s Asian empire. The next morning, a Tuesday, the Hutchinsons, Clarkes, and Fanueils ventured “abroad” and found “Printed Notiications” all over town, calling local residents to witness their resignations at the Liberty Tree on Boston Common. The notices implied, as Richard Clarke later complained, that they had given up their part in the tea consignment, even though they had agreed to nothing of the sort. But their nemeses had no patience for details like that.3 At eleven o’clock on Wednesday, church bells across Boston began to toll and continued until noon. The town crier walked the streets, summoning people to the Liberty Tree. And they came. Some estimated 500 people, others guessed even more. Meanwhile, the merchants involved in selling the East India Company’s tea met at Clarke’s warehouse on King Street. No one there “entertained the least thought of obeying the Summons” to the Liberty Tree. One did not obey “people of the lowest rank,” as Clarke termed the crowd. Instead, the merchants opposed “the Mob” and decided to force them to obey, and in this they were pleased to have “a number of Gentlemen of the irst Rank” join them.4 At one o’clock that afternoon, an angry crowd marched from the Liberty Tree down to the warehouses to seek out the merchants who had ignored their summons. Massed at the warehouse door, the crowd sent a deputation inside asking the merchants to give up selling the Company’s tea and to agree to send the tea ships back to Britain once they arrived. The merchants “irmly refused” and gave the request its “proper contempt.” The response stirred the already angry mob outside. “Irritated with the haughty manner with which the answer was . . . given,” the people charged the warehouse door.5 The merchants set their servant to shut the outer doors before the mob could break in. Nathaniel Hatch, a local justice of the peace with them in the warehouse, rushed to help. They made “all possible exertions to stem the torrent of the Mob.” Hatch shouted out again and again to the people outside. He was a magistrate. In the king’s name, he commanded them to disperse. Outside, the Revolution . 9 crowd shouted back all sorts of “insulting and reproachful words,” and, with so few people holding the doors from within, the mob ripped them clean off their hinges.6 Inside, the merchants and their “irst Rank” friends led upstairs to the counting house. The staircase was narrow; a hatch at the top opened into the upper story. On the staircase the merchants made their most “vigorous efforts” to ight back the crowd below before leeing into the counting room and throwing down the hatch. There they sat. After an hour and a half, the throng, bored, was mostly “drawn off.” And the merchants, surrounded by a pack of friends, made their way home in relative safety.7 That was hardly the end of it, however. The next night Benjamin Fanueil found another “menacing Letter” addressed to all the tea merchants “thrust under” his door. It tried to “intimidate them from executing their Trust,” in Clarke’s phrase.8 Gentlemen, It is currently reported, that you are in the extremest anxiety respecting your standing with the good people of this Town . . . as Commissioners for the sale of the Monopolized and Dutied Tea, we do not wonder in the least that your apprehensions are terrible . . . long have this people been irreconcilable to the Idea of spilling human blood, but . . . this is the last warning you are ever to expect. Thursday evening 9 O’clock November 4th, 17739 Similar threats and plenty of rumors circulated in the days that followed. Then, mid-month, the Fanueils began to hear stories that “a number of picked men” were going “to break into our house one night.” “I can hardly believe it,” Benjamin Fanueil wrote, but in his words a sense of fear belied his disbelief.10 The Clarkes, too, heard the rumors of “an Assault” on their home. On November 17, as the Clarkes gathered for a family celebration, the rumors proved true. Suddenly they were “alarmed with the sounding of Horns, whistling and shouting, and a violent Beating at the Doors.” The Clarkes moved the “women into the safest Part of the House,” while the men tried to secure the doors and windows on the bottom story as best they could. From the