Page 87 - Merchants and Mandarins China Trade Era

73.

member's debts over all the members, they intermittently went

collectively bankrupt.

ln 1760 the merchants of Wai-yang Hong, with the

support of the Governor-general of Liang-Kwang, petitioned

for the creation of another organization. When they were
granted their wish, they called this new structure by the old

39
name of Kung-hang or Co-hong. By this time the Imperial

government had also established the system of Security

merchants in the foreign trade. The new Co-hong became an

umbrella over the Security or Hong merchants. It received

complete control over all commercial transactions of the

foreign merchants, including their payment of duties and taxes

plus their use of capital to finance the trade. At this time

the government also instituted a new tax on the foreign trade,

a levy of three percent on all imports. This "Consoo" (Hang­

yung, for the use of the Hong) charge theoretically went into a

fund to cover any financial liability of the members of the
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Co-hong.

When the first American traders arrived at Canton, the

new Co-hong was in operation. They quickly discovered that the

Security merchant was their most important contact at Canton.

Once the master or supercargo contracted to have his vessel

39
Liang, Kwang-tung-shih-san-hang-kao, p. 105. This book
gives a thorough and very detailed history of the Co-hong and
of all Hongs ever involved in foreign trade. Also Morse and
Macnair, Far Eastern International Relations, pp. 58-59.

40
Liang, Kwanq-tung-shih-san-hang-kao, p. 106, and
Morse and Macnair, Far Eastern International Relations, p. 59.