The upper part of this stele depicts the outline of the coastlines, the layout of mountains and lakes, as well as the administrative regions at that time. The lower part is a record of the territory changes from the ancient time to the Song Dynasty. The original stone was engraved in 1247 (Southern Song dynasty) and was placed in the Prefectural Confucian Academy(Fu Xue). It is now stored in the Museum of Engraved Stone Tablets in Suzhou, China.
Houqua’s “Swiss Account” in America: The Legacy of a Farsighted Entrepreneur (p.177~204)
6.1 A “Blind Trust” Hidden from Many 6.2 The Different Layers of Houqua’s Deep Pockets 6.3 Reaching into the Secret Compartment of Houqua’s Deep Pockets 6.4 The Size of and the Holdings in this Treasure Trove 6.5 Dissolution of the Trust and the Gradual De-Personification of the Relationship 6.6 The End of the Partnership
To Reorganize or To Be Recognized? Reconstituting Business in the Reconfigured World of Global Business (o.135~176)
5.1 Houqua’s Succession Plan 5.2 The Lasting Appeal of Canton to Houqua’s American Partners 5.3 Houqua is Dead, Long Live Houqua? 5.4 Global Financier or Just a Gold Mine? 5.5 Young Houqua’s Attempt to Break into the New System 5.6 The Seld-De-globalization of Houqua’s Family
Sustaining Trust: Overcoming Business Uncertainties through Time and Space (p.105~134)
4.1 The continuing Chain of Delegates to Canton 4.2 Replicating the Image 4.3 Distilling the Image and Achieving Mass Dissemination 4.4 Trying Times 4.5 The Testing of Trust
3 Weaving a Trading Network: Breaking Free with the Eagle (p.72~104) 3.1 Finding a Common Language for Capitalistic Exchange 3.2 Calculated Risks 3.3 Choosing Strategic Partners and Sanitizing Opium Exposure 3.4 Completing Circulation in the Network: What to Do with the Money? 3.5 The Use of the Law, or Not
Figure 3.1. Amount of Specie, Bills, and Merchandise Exported to Canton on the American Accounts, 1805-1833. Sources: Timothy Pitkin, A Statistical View of the Commerce of the United States of America, Including Also an Account of Banks, Manufactures and Internal Trade and Improvements: Together with that of the Revenues and Expenditures of the General Government: Accompanied with Numerous Tables (New Haven, CT: Durrie & Peck, 1835), 303. See also Yen-p’ing Hao, “Chinese Teas to America—a Synopsis," in America’s China Trade in Historical Perspective: The Chinese and American Performance, ed. Ernest R. May and John K. Fairbank (Cambridge, MA: Committee on American-East Asian Relations, Department of History, Harvard University, 1986), 23.
2 Lodging in an Existing Institution Taming the Lion at Home (p.32~71)
Figure 2.2. Market Size and Market Shares of Tea Exports from China, 1775-1800 (data are missing for 1782). Source: Hosea Ballou Morse, The Chronicles of the East India Company, Trading to China, 1635-1834 (Oxford: Clarendon Press, 1926-1929), passim. My analysis of Louis Dermigny, La Chine et l’Occident: Le commerce à Canton au 18e siècle, 1719-1833 (Paris: S.E.V.P.E.N., 1964) reveals similar trends.
2.1 The Rising Trade of the British Empire 2.2 The British East India Company Flexes Its Mustles 2.3 Houqua’s Family Enters the Stage 2.4 Houqua Comes to the Fore 2.5 Configuring the Market to Deal with an Overpowering Buyer 2.6 Taming an Important but Difficult Trading Partner
Figure 2.3. The EIC’s Allocation of Shares among the Hong Mer-chants, 1800-1833. Note that the involvement of Mouqua lingered and that of the house of Puankhequa reemerged, albeit on a reduced scale. Puankhequa was compelled by the Qing government to return from retirement; it is ironic that the motive of the Qing state to secure a larger group of qualified traders coincided with the interests of the EIC and conflicted with the interests of the Chinese merchants. Sources: EIC G/12; R/10; Hosea Ballou Morse, The Chronicles of the East India Company, Trading to China, 1635-1834 (Oxford: Clarendon Press, 1926-1929), passim.
1 A Study of the Structural Context: The Colliding Worlds in Canton (p.18~31)
Figure 1.1. Schematic Representation of the Key Figures in the Genealogical Records of the Wu family up to Houqua’s generation.
1.1 A Family on the Move 1.2 Forming the Nexus of International Trade in Canton 1.3 The International Port Takes Shape
Figure 1.2. Maritime Customs Revenue Collected in Canton. For issues related to year-to-year comparisons because of the intericalary month, see Ch’en Kuo-tung, “Qingdai qiangi Yue haiguan de liyi fenpei (1684-1842): Yue haiguan jiandu de juese yu gongneng" (The Accrual of Benefits in the Maritime Customs in the Early Qing [1684- 1842]: The Role of and Function of the Hoppo), Shihuo yuekan (Shih-Huo Monthly) 12, no. 1 (April 1982): 19-33; Zhongguo di 1 lishi dang’an guan (Number One Historical Archives of China), Qinggong Yue Gang Ao shangmao dang’an quanji (A Complete Collection of the Archival Documents on the Trade in Canton, Hong Kong, and Macao from the Qing Palace) (Beijing: Zhongguo shudian, 2002), 31-32; Liang Tingnan et al., comps., Yue haiguan zhi (Gazetteer of the Maritime Customs in Canton) (rpt., Taipei: Wenhai chubanshe, 1975), 10:7b-16b.
Each period of global exchange involves its own pattern of connectedness with which the participants must negotiate. The China trade focusing on early-19th-century Canton is no exception. Chapter 1 explores the structural context that gave rise to the business opportunities and challenges in Canton during this period. The chapter investigates how the Europeans’ expansion into the New World and beyond intersected with the movement of diasporic Chinese along the southeastern coast of the Qing Empire and the Southeast Asian ports. Houqua’s family had moved to Canton in the previous century when, by the mandate of the Qing state, the city became the nexus where seafaring traders from the West would interact with commercially savvy Chinese entrepreneurs of the South China Sea. This study situates the relocation of Houqua’s family to Canton in the context of the geopolitical situation that led to the emergence of the international port of Canton.
Entrepreneurs must establish themselves within the existing institutional frameworks and develop a sufficient power base before altering the rules of the game to their advantage. Chapter 2 examines the important business institutions for Sino-Western trade in early-19th-century Canton and the business strategy that Houqua employed to establish a presence in the China trade to consolidate his power and, eventually, to outsmart the overpowering British merchants. The waves of international trade in Canton were accompanied by the commercial impact of the reshuffled political powers in Europe. Just as Houqua was achieving prominence in commercial circles in Canton, the French wars, in conjunction with the British Commutation Act, which discouraged smuggling from continental Europe by drastically reducing customs and excise duties on tea in Britain, disrupted China’s trade with continental Europe and allowed Britain to garner the lion’s share of the trade in Canton. Keenly aware of the ascendancy of Britain, Houqua moved to consolidate his share in the business of the EIC. Although trade with the EIC provided a solid bedrock for his business, Houqua still had to counteract hegemonic British interests in Canton. Houqua accomplished this feat by redefining the terms of his business. Expanding beyond his role as a supplier of Chinese goods, he maneuvered into a pivotal position by becoming a critical source of funds for the British, thereby restructuring the division of the economic gains from trade and capturing an increasing share of the profits.
Patterns of global exchange are not static, and participants in the exchange actively transform these patterns to their own benefit. Chapter 3 examines how Houqua transformed his trading network and charted new courses from his home base in Canton. As he explored trading with the newly arriving Americans, Houqua faced a different set of challenges in his international dealings. He confronted these challenges with a pragmatic approach to business. Houqua redirected the flow of his goods and capital and positioned his business for the emerging U.S. market. By allying with his trusted American partners, Houqua not only entered U.S. markets but also tapped into investment opportunities in the financial centers that were burgeoning along the British sinews of capitalistic exchange. At a time when Westerners were still struggling to extend beyond their foothold in Canton into the interior of China, Houqua, by directing traffic from Canton, had already managed to access many overseas markets. Such a formidable accomplishment required that Houqua surmount significant legal and linguistic hurdles and, more importantly, assess and balance his risk exposure in the expanded time and space that his business encompassed.
To fashion new patterns of exchange and to extend trading networks require that enterprising traders cultivate trust and credit with their partners. Houqua’s strategy in developing mutual trust with his partners is the crux of the discussion in Chapter 4. Houqua’s success depended on his ability to maintain an intricate business balance on a global scale. In addition to carefully positioning his capital and goods around the world, he also secured a network of trust with his international allies. He sustained this network through the continuing physical presence of his closest partners in Canton, the exchange of token gifts with associates abroad, as well as the distribution of his portraits along the sinews of his business empire. Underlying the long-standing relationship in Houqua & Co. was the shared pursuit of profits. This impressive international network not only allowed Houqua to access many trading centers in the West but also enabled him to protect his assets for the next generations and to safeguard his capital during the ensuing politically tumultuous periods.
Managing Houqua’s elaborate business design required the sagacity of a dynamic entrepreneur. Development of the business subsequent to Houqua’s demise in 1843 resulted as much from the ever-shifting geopolitical landscape as from the capabilities of the family members who inherited Houqua’s estate. Chapter 5 studies the reconfiguring of the world of business in the aftermath of the Opium War and the attempt by Houqua’s son to reorganize the family enterprise, even as the various components of his elaborate design were falling apart. Compared to his father who was ever eager to capture additional profits by regulating the currents of commercial traffic, Houqua’s son was more interested in shoring up the status of Canton than in partaking in a recharting of the family’s business flows worldwide. This heightened interest of Houqua’s family in local development highlights the centripetal forces of the Sino-centric culture, which ultimately led to the recoiling of the family from the global reach that Houqua had attained.
Withdrawal from active participation in business does not precipitate an immediate dissipation of assets. Despite his descendants’ retreat from international trade, the immense capital that Houqua had amassed continued to generate profits for his descendants, albeit through investments that also served the business needs of the American partners. Chapter 6 highlights the pioneering transnational investments of a portion of Houqua’s estate. The most important element of Houqua’s legacy was his decision to entrust his American partners with long-term overseas investments, a decision that reflects the unique challenges facing a business based not on the productivity of physical assets but also on the profitable deployment of liquid assets predicated on the flow of information. Contrary to our conventional emphasis on Chinese wealth accumulation through investments in physical assets and the weakness of the Chinese capital market, Houqua’s strategy forces us to rethink how his farsighted risk management program and entrepreneurial instincts enabled him to overcome the political barriers to doing business in late imperial China and to leverage the boundaries to structure his investment approach.
In addition to his investments in land and properties, the most significant assets that Houqua bequeathed to his descendants were his investments in capital markets that he had entrusted to his handpicked American partner. Decades after Houqua’s death, this partner continued to remit funds to Houqua’s family due to a desire to honor his personal ties to Houqua rather than due to any institutional obligations. From the perspective of the deployment of capital, his American partner became the true inheritor of Houqua’s business from which Houqua’s family continued to profit. Over time, Houqua’s family became merely the financial beneficiaries of his estate as his American partners leveraged Houqua’s capital for investments well beyond the confines of China. Rather than viewing this subsequent period as a usurpation of Houqua’s business enterprise, I regard this development as evidence of Houqua’s foresight in separating management from ownership of assets to take advantage of information flows, a critical factor in the business of trade and finance. As the second half of the 19th century unfolded, Houqua’s plan proved to be effective. The sustained success of Houqua & Co. in navigating international trade transcended national boundaries and defied the simple binaries of the West and the Rest.
This study of Houqua’s business sheds light on the dynamics of global exchange configured around 19th-century Canton as it explores the structural context within which Houqua operated, his strategy to establish his business and to transform the institutions of trade, his efforts to expand his trade network and to cultivate trust among his partners, as well as the lasting legacy of his heir’s reorganization of the family enterprise and the enduring impact of Houqua’s innovative transnational investments. This pattern of interconnections, like any other pattern of global interconnections, assumed a unique configuration that involved both regional and global economies. Houqua, as well as his China trade partners, worked within this configuration and forged new ties to transform it as they negotiated the structural and institutional frameworks for their own benefit. In their search for profits, they fueled the development of linkages around the world in a manner that was distinctive to the times.
Records of the accomplishments of Houqua and his partners in driving the commercial vitality of and the global interactions in old Canton faded only because we have allowed our image of this former emporium to be clouded by China’s weaknesses beginning in the mid-1800s. The subsequent period of exchange underwritten by the rules of international exchange that the Western powers imposed on operators worldwide hardly lasted a century, thus barely matching the longevity of the Canton system. Houqua’s story reshapes our understanding of China’s economic experience in a global context. The success of Houqua & Co. in configuring its networks in the fluid context of the early 19th century remains instructive for us today as the contemporary balance of political power renders the imposition of a West-centric world system increasingly problematic and requires that international traders adapt dynamically to a new world order in which China, once again, occupies center stage.