An Empire on the Edge

by Nick Bunker

  At the heart of this commercial empire lay the booming trade in commodities, not only the tea that the East India Company brought home from China, but also rice from Charleston and wheat or tobacco from the Chesapeake, not to mention cotton from India and sugar from the Caribbean. A global system of exchange had come into being, dealing in these items and others more exotic, but in the two decades after 1750 the volume of trade soared to reach a remarkable new peak. By 1772, soft commodities of such a kind accounted for nearly half of the goods imported into Great Britain. In the pursuit of financial gain, the British had created a trading system that resembled a giant hedge fund, investing in items grown by African slaves and Chinese peasants. Complex and dynamic, it was run from London, Liverpool, Bristol, and Glasgow and fed by a myriad of factories and farms, spread out across the globe from Maryland via Calcutta to Canton.

  For Lord North and the Treasury, the hedge fund had come to be an essential source of imperial revenue. The global trade in commodities accounted for a quarter of the taxes they collected; for merchants and planters, it was immensely lucrative; and it filled the holds of hundreds of ships in the North Atlantic and the tropics. But by its very nature this great trading system was hazardous and volatile. Men and women borrowed heavily to bet on the price of tea and sugar and tobacco or to buy the land where they were grown. Exposed to many dangers, natural and man-made, dealing in commodities could lead to ruin as easily as riches. If and when a crash occurred, the system might come tumbling down entirely.

  Of all the players in the game, the East India Company was the largest, the most aggressive, and the one most addicted to risk. As speculators do, the company’s directors pushed their luck too far, until at last the company toppled over under the weight of its own ambition, leaving Lord North to pick up the pieces. In the process he made a series of fatal errors that brought about the revolution in the colonies. Through the eyes of a British sea captain approaching the shores of Asia, we can start to see how the debacle began to take shape.6

  * * *

  * The British navy was certainly the strongest in the world, but in 1774 the British army numbered only 27,000 men, while Russia had about 290,000. In 1782, the British reached a maximum strength of 150,000 soldiers under arms, of which only 35,000 were stationed in America. Accurate military statistics for France are hard to come by, but in peacetime its army was about 150,000 strong, and in time of war it was much larger.

  Part One

  THE EMPIRE OF

  SPECULATION

  Chapter One

  THE TIGER’S MOUTH

  China is located in the centre of the earth, and surrounded by seas.

  —A CHINESE GEOGRAPHER, IN THE REIGN OF THE EMPEROR QIANLONG1

  They reached the coast of China in a squall of rain. It was August, a season when the monsoon turns the sky to indigo, and the crossing from Sumatra had been swift but arduous. As if to chase her even faster, all the way over thunderstorms followed the ship, the Calcutta, soaking her planks and deafening the crew like the sound of artillery.

  A new ship, fresh from a yard in the Thames, she had a young man for her master by the name of William Thomson, at the helm of his first command. In wide tacks, he swung the Calcutta away from the shores of Vietnam and up the very middle of the South China Sea. Although at this time of year it was by far the safest course, even so the route contained a host of hidden perils: sunken atolls, shoals, and reefs, known by the names of English ships whose wrecks lay on the sand beneath them. Each evening at sunset, Thomson would gaze at the horizon, in search of clouds the color of copper, the only warning he would have that a typhoon was approaching.

  At last, early in the afternoon of August 20, 1771, through the wet he saw a line of rocks, resembling a row of jagged teeth. With a heavy swell running from the east, making the hull of the ship roll like a pig, an island appeared from out of the spray, and then another, with the Chinese mainland close behind. He found a landmark he knew from his earlier voyages to the region and looked at his chart: sixty miles down the coast was the port of Macao. Seven months had passed since they left England: not the fastest voyage of the season, since there had been accidents, deckhands had died, and they had been forced to stop in Java for repairs. Even so, Thomson brought his ship safely to Canton in search of tea and porcelain and profit.2

  It was a frantic year, the peak of a boom in the eastern trade, a boom that had lasted nearly a decade and would end in something close to catastrophe. Thirty ships made the long haul from Europe to China, two-thirds of them British, flying like Thomson the flag of the East India Company. Of all the craft in that busy season, his would be the busiest of all. The following spring, when the Calcutta left for London, she carried the largest cargo in a European fleet that brought home nine thousand tons of tea. Why did they drive their ships so hard to bring it back in such enormous quantities? Because for the British tea had become far more than a bland, familiar drink for the breakfast table.

  Instead, tea had acquired a more exalted status, as a prize to be fought for by powerful and ambitious men. It was one of a handful of commodities that served the wider purposes that crude oil and copper fulfil today, purposes that far exceed their utility in daily life. Traded across the globe, they set all kinds of wheels in motion, as objects of speculation, as a source of jobs and revenue for nations, and as a kind of currency themselves. To take the economic pulse of the modern world, we need only follow the ups and downs in the price of base metals and petroleum.

  Much the same was true of tea, tobacco, and sugar in the 1770s. In the British Parliament the point was made emphatically by Edmund Burke. “Tea is perhaps the most important object, of any in the mighty circle of our commerce,” he declared, and Captain Thomson would have agreed entirely. In his career and in the adventures of his ship, we can see in miniature all the defining features of British enterprise in Asia, not only its hardships and its vices, but also its virtues of expertise and courage, and above all its economic motives.3

  The Calcutta had left the Thames at the end of 1770, resting for a while at Portsmouth, where, still in sight of England, Thomson lost part of his crew to the Royal Navy. Rumors were rife of an imminent war with Spain, arising from a quarrel about the Falkland Islands. So a boat from a warship came alongside and pressed eleven sailors for the service of His Majesty. A few months later, in the South Atlantic, some of the crew began to brawl and shirk their duties. Order was swiftly restored, with a few men flogged and the rest set to work picking oakum and washing the gun deck time and again, but throughout the voyage the atmosphere remained edgy and bad-tempered.

  On they went to the south past the Cape of Good Hope, running fast with the wind behind them until, with the temperature falling, the ice drew near and a storm began to gather. The top of the mainmast cracked and split, a heavy sea ruined their stores of pork and biscuits, and four months out from home scurvy began to take its toll. At last Thomson dropped anchor at Jakarta, pausing briefly for repairs, before the Calcutta swung north on the final leg of the journey, losing four sailors swept overboard or dead from disease. But beneath the hatches sealed with tar, his cargo remained intact: English marble, lead, woolen cloth, and, most important, the bullion required for doing business at Canton. The ship carried chests of Spanish silver dollars from Peru with a value in sterling of £30,000.

  Two views of an East India Company ship, the Princess Royal, painted by John Cleveley the Elder before she sailed to China in 1770. © National Maritime Museum, Greenwich, London

  Beating against the current, from her point of landfall the Calcutta took a week to reach the Pearl River, where at last she turned a corner and left Macao to port. Passing a battery of Chinese guns, she entered a strait called the Bocca Tigris, or the Tiger’s Mouth. From the moment they passed the Bocca, seafarers from the West entered an unhealthy little enclave where months of boredom and alcohol lay ahead. Beneath a stifling canopy of cloud, Thomson made for the haven at Whampoa Roads. There a line of wooden stake
s for fishing nets peeped out above the water, marking a limit his ship was forbidden to pass.

  As the Calcutta dropped anchor, two Chinese boats closed in around her and remained clamped to her sides until she left. In the distance, Thomson and his crew saw the Chigang Pagoda, crimson against the gray of the sky; and, in the foreground, wide, flat islands of mud, the only place where they could take a walk or play a game of cricket. Here they would bury their dead, slaughter pigs for the journey home, and keep their stores and canvas in sheds they made from rushes and bamboo. Around them lay rows of European ships, and Thomson carefully noted their colors. They were Dutch and Swedish, there was one from Denmark, and the French were on their way, but mostly they were British sister ships of his. From time to time a sampan would approach the Calcutta filled with harlots, waiting to bribe the police for permission to sell their bodies on the deck.

  When the officers went upriver to Canton, to the compound where the East India Company did business, their every move was watched. Sometimes a fracas would occur between the police and a tipsy sailor. On one occasion in 1769 a seaman lost his temper, shooting a mandarin, and the Chinese took reprisals, staking out some English crewmen in the sun. Bored and angry, the deckhands talked of mutiny and hatched a plan to take Canton by storm. To nip any trouble in the bud, the captains had to keep their discipline as tight as ever. And so when a drunkard tried to sell a pile of cannonballs to the locals, Thomson flogged the man severely. Every master in the fleet kept a log filled with incidents like this. All those that survived the journey home were filed away in London, where they remain today, mostly unread since the days when they were written.

  Such were the harsh realities in the European foothold on the coast. Somehow a deceptive glamour has come to surround the East India Company: an entity still occasionally remembered by historians with too much respect, as though it served some great, farsighted purpose. In the eighteenth century, the company had visionaries in its service—navigators, a few scientists, or the greatest of them all, Sir William Jones, who translated the Hindu scriptures into English—but they were few and far between. At home there were ideologues and pamphleteers, armchair patriots who gloried in the name of empire. When the army or the navy defeated the French, victory led to a surge of national pride in a kingdom that believed it was born to rule the waves. But when we meet the Britons who actually went abroad, their letters and diaries tell a story far simpler and less chauvinistic.

  Courageous though they were, they sailed to Asia for one reason only: to make a profit as quickly as they could and get out again before they died from fever, drink, or syphilis. In China the company could buy a pound of tea for silver worth eleven English pennies and sell it at home for more than three times as much. Dealing for themselves, mariners like William Thomson did the same. With so such money to be made, a dash for growth took place. In the peace that followed the defeat of France in 1763, the tea trade between Great Britain and Canton doubled in size in the space of eight years.

  At home demand for the product had risen by leaps and bounds. Of course nobody really needed tea, a point often made by old-fashioned moralists who saw tea drinking as a form of decadence. The French hardly drank it at all, except as a medicine. Neither did the Germans or the Spanish. Only the British and their American cousins had come to see it as something they could not do without. We could ruminate forever about the reasons this was so and why each country differed in its taste. But for a man like Captain Thomson the question was irrelevant. From his point of view, all that mattered was this: that tea had become embedded in the British way of life. And people drank tea in ever larger quantities because the price kept falling, despite the taxes loaded on the product.

  When it first arrived in London in the 1650s, tea had been scarce and precious, with a flavor very different from the mild, warm beer the British drank with every meal. For nearly seventy years it remained an expensive status symbol consumed by the elite. They called the principal variety Bohea, a mangled English name for the Chinese hills from whence it came. With its dusty black leaves that smelled like scorched grass, it was a crude form of tea. No connoisseur would drink it today, but to begin with, it was all the British had. As late as 1712, Bohea was still rarefied enough to figure as an object of satire for the poet Alexander Pope. But as the century wore on, the beverage ceased to be so scarce. The turning point came in the 1720s, a prosperous time in Britain. China seemed to have unlimited supplies of tea, which arrived in England in quantities undreamed of hitherto. Once it was commonplace, Bohea lost its cachet and became a drink for tradesmen and their wives. As markets do, the market for tea grew wider and became more differentiated, with the wealthy turning to green, aromatic varieties, where the price was higher and the taste more delicate.

  By the 1740s the official figures showed that the British were drinking four times as much as they had two decades earlier. If we count the growing black market as well, made up of tea that was smuggled in, the rate of increase was probably still greater. By the time the Seven Years’ War began, the trade was so large that the East India Company was sending nine ships to the Pearl River each year.4

  During the war the tea trade stagnated for a while because of the risk of meeting French warships at sea. When peace returned, the floodgates opened wide. Another boom began, the boom that carried Thomson to Whampoa. For the investors who owned the East India Company’s stock, the profits were enormous. In 1771, the richest noblemen in England, the Dukes of Bedford and Devonshire, enjoyed an annual income of about £50,000 each from the rents their tenants paid. That same year, the company made a profit of six times that sum from its trade in China tea alone. Between them, the East India Company and its Chinese hosts had engineered a business model with apparently endless potential, but one that was far too good to be true.5

  Between the hills where the tea was grown and the drinkers in the West, there lay a long chain of dealers and agents, each of them keen to take a cut as the stuff passed down the line. At each step, the system encouraged those involved to deal in ever larger volumes of tea, and to borrow heavily in the expectation of reward. But ultimately they all relied on the consumers, chiefly in Great Britain. So long as they continued to buy all the tea that returned from Asia, the China trade would thrive, but if their thirst for tea ever slackened, the consequences would be dire.

  By intervening in the trade, the government had made the system all the more unstable. From the moment tea was introduced to England, the state began to tax it, with at first a modest duty of just 5 percent. But each time Britain fought a war with France, the taxes rose, on alcohol, tea, and tobacco alike, until they reached a peak in 1765. By then, tea sold in London carried seven separate duties, a combination of customs and excise, amounting to 40 percent of the retail price, enough to tempt even the most honest housewife to dabble in contraband. Above the counter, a pound of premium tea would cost her six shillings. If she knew a smuggler or his mate, in the capital or near the coast, she could get the stuff for less than four.

  In Europe in the eighteenth century, from Connemara to the Urals there always existed an immense illegal economy, thriving in the shadow cast by indirect taxation. Every monarch fought a losing battle with the smuggler of salt or alcohol or tea, but tea leaves were one of the easiest products to carry and conceal. By the end of the 1760s, nearly a third of the tea arriving from China was destined for the hands of smugglers by way of friendly ports in Europe. From there it crossed the sea to Britain or America. Keen to undermine the revenues of George III, the king of France connived at the illicit trade, and the Dutch did much the same. Ceasing to be a small affair, the work of little bands of criminals, smuggling became a great enterprise of its own, run by commercial syndicates and financed by banks, an enterprise so large that it might wreck the legal trade entirely.

  By the time Thomson left Whampoa Roads for England early in 1772, a crisis of such a kind was rapidly approaching. The price of tea was about to collapse, as the supply of it fa
r exceeded the amount that Europe could absorb. From time to time a glut had occurred before, but nothing on quite the scale of the one that appeared in the early 1770s. It arose not only because of greed, but also because the tea trade had become as complex and as volatile as the global trade in oil today. It had its downstream and its upstream, its producers, brokers, and refiners and a horde of hungry mouths to feed. This intricate chain of industry and speculation began in the China of the emperor Qianlong.6

  THE EMPEROR AND THE HONGS

  At this moment in history the Chinese empire, not the British, could rightfully claim to be the greatest in the world. For nearly four decades Qianlong had occupied the throne, reaping the rewards of prosperity and war. To pacify his dominions, he had fought six great campaigns. In Tibet and central Asia, his army had crushed the last elements of resistance. Even though Burma and Vietnam remained free and independent, his borders had come to be secure.

  Safe in his domain and almost entirely self-sufficient, the emperor imposed the strictest limits on foreigners who hoped to disembark on his shores. Every port except Canton was closed to them. The interior was completely out of bounds. If all Westerners were suspect and inferior, the British were seen as the worst of all, because in the north of India and in Nepal they were threatening to trespass on his borders. In the late 1750s, a few English ships ventured up the Chinese coast toward Zhejiang, the commercial heart of the empire, a thousand miles north of Macao. The experiment ended badly when a merchant named James Flint tried to petition the emperor, complaining about officials who demanded exorbitant bribes. While Flint was deported, his Chinese contacts were locked up, tortured, or beheaded.