How the China Trade Helped Make America

This year’s presidential election has brought the latest round of China bashing, but the anti-Chinese strain in American politics ignores our long and highly profitable history of trade and commerce with the country writes Eric Jay Dolin, the author of When America First Met China.

11.04.12 9:45 AM ET

China bashing has become a cottage industry during this Presidential season. Whether it’s griping about the trade deficit, decrying the amount of our debt China owns, or skewering China’s currency policies, Americans see bogeymen around nearly every corner. The merits of such concerns are debatable, and I gladly leave those arguments to policy wonks and modern-day China watchers. But, it is important to remember that our relationship with China goes all the way back to the beginning of the Republic, and in those dramatic and tempestuous years of America’s youth, the China trade provided a much needed, and greatly appreciated boost to the American economy. Back then, China wasn’t a threat, it was a golden opportunity.

It is not surprising that Americans pursued the China trade as soon as the American Revolution ended. After all, American colonists had long had a love affair with things Chinese. From the mid-1600s up until the eve of the revolution, the British East India Company supplied the American colonists with Chinese goods, most importantly tea, which Americans consumed at a rate of more than one billion cups annually in the early 1770s.

Before the revolution, Americans had been barred from entering the China trade on account of the British East India Company’s monopoly on Far Eastern commerce. But when America won the war, the Company’s monopoly no longer applied, and Americans were free to trade with China, and trade they did.

Between 1784, when the Empress of China blazed the trail, and the end of the War of 1812, nearly three hundred American ships made a total of 618 voyages to Canton.

These ships carried cargoes of ginseng, sea otter and fur seal skins, opium, sandalwood, and Spanish silver dollars, which were used to purchase Chinese tea, silk, porcelain, and other exotic items.

Among the merchants who took the lead in the China trade were John Jacob Astor of New York, Stephen Girard of Philadelphia, and Elias Hasket Derby of Salem. Their China trading and other business activities made them among the wealthiest people in the United States, with Derby becoming the country’s first millionaire, Astor its first multimillionaire, and Girard nearly equaling Astor’s fortune.    

Although merchants benefited most from the China trade, they weren’t the only ones who were enriched. During the Revolution, much of America’s merchant fleet was destroyed by the British navy, which tenaciously targeted American ships at sea and in port. That meant that new ships had to be built for the burgeoning China trade, bringing shipyards back to life and employing thousands of men in various trades.

Those ships had to be outfitted, employing thousands more, and they had to be manned, which created a high demand for officers and crew. Each time a ship returned, its owners had to pay customs fees to the government, and when the ships’ cargoes were sold in shops they created another source of revenue.

Thus in many ways the impacts of the China trade were felt far and wide. The money funneled into shipbuilding, outfitting, and manning the ships, paying the taxes, and selling the goods cascaded through the economy and made it stronger. The emerging China trade also placed the United States on a firmer footing to defend its rights upon the seas by serving as a nursery for seamen who could be called upon by the merchant marine and naval forces to help defend the country.

After the War of 1812, up through the Civil War, the China trade continued to enrich merchants and bolster the economy, at times exceeding 4 percent of the nation’s foreign commerce. The China trade also led to the development of clipper ships, the “greyhounds of the sea,” arguably the most magnificent sailing vessels ever built, which were designed to get to China and back quickly, because the fresher the tea, the higher the prices that could be charged.

The China trade was an early engine of American investment. The most prominent and successful China merchants plowed their millions into a wide array of business ventures—including railroads, banks, and mining ventures—that helped build America’s nineteenth-century economic and industrial might. And many China merchants invariably became philanthropists, leaving behind lasting legacies.

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These American fortunes, and all their good works, however, must be weighed against the damage that was done in acquiring them. Many of America’s China traders earned a significant portion of their wealth from the morally and legally indefensible opium trade. And though the Opium Wars (1839-42 and 1856-60) were not American wars, Americans still bear a heavy responsibility for having nurtured the drug trade.

Perhaps the most enduring, and certainly the most beautiful legacy of the early China trade can be seen in art museums and people’s homes, which contain exquisite objects brought over from the Middle Kingdom.

So, when you read the heated, and often overblown news coverage on the tribulations of the modern China trade, bear in mind that we have been trading with China for more than 225 years, and in many ways, that has been a good thing.