Page 204 - Merchants and Mandarins China Trade Era

190.

American merchants at Canton had used bills of exchange

as early as 1810 but without success. They therefore used

specie, especially since it gave them a favorable position in

the Canton trade. But, as the expansion of trade outstripped
1
supplies of specie in the late 1820 s, Americans turned to
69
bills on London to finance their trade. (Even with the

importation of English manufactures in American vessels, the

American China trade was a deficit trade with exports from

China consistently higher than imports.) This system of bills

operated successfully because of the English private traders

at Canton, who required a means of remitting their increasing

profits from the opium trade back to England. These merchants

bought up American bills on London, giving them the specie

(Chinese silver or sycee) which they received in payment for

opium. In turn American merchants paid for their teas and silks

with the sycee, while the English merchants remitted the bills

to London for collection. In this way both groups profited
70
in their separate branches of the China trade. Besides the

general use of bills on London, each American house developed

ties with a financial house in London for credit purposes. The

most significant of such"connections was that between Russell &

Co. of Canton and Baring Brothers & Co. of London. This finan-

69
Morse, Chronicles of the East India Compu.ny, III, 141 ..
IV, 330. Morse and Macnair, Far Eastern Internu.tional Relations,
p. 67.
7
°For a discussion of the English side of this, see
Greenberg, British Trade and the Opening of China, pp. 162-65.