Canton, Cancao, and Cochinchina: New Data and New Light on Eighteenth-Century Canton and the Nanyang

Using data from little known eighteenth-century Dutch, Swedish and Danish documents, this article reveals the important, but previously obscured, commercial connections between eighteenth-century Canton and Nanyang Chinese and Southeast Asian commodity producers at the time. Southeast Asian imports – tin, sago and rattan – were integral to the growth of Canton’s premier export trade, tea, as well as to other manufactures prized by Europeans, diasporic Chinese, and local peoples in the Nanyang. This article examines the new data and shows how it sheds new light on the complex interplay between trade, economic growth, and eighteenth-century socioeconomic change as it occurred simultaneously on different shores of the South China Sea. Introduction This essay is a first attempt to explore a series of little-known connections between the great southern Chinese trading port of Canton (Guangzhou) and Southeast Asia during the eighteenth century. Although Canton was a major trading partner of various Southeast Asian ports at the time, these commercial ties have never been examined as integral parts of a commercial system that linked primary producers in the Nanyang, or Southeast Asia, with the major economic driver of the Chinese export economy of the time. Instead, in the traditional literature, these connections were either largely ignored or subsumed within studies of the Hong merchants, the foreign East India companies in China, or the Portuguese in Macao. Where Southeast Asian commerce was mentioned, it was usually treated as remote, fragmented, or only marginal to the discussion of commercial history. Conversely, when Southeast Asian perspectives dominated, the role of Canton in Nanyang regional history was largely shrouded in shadows, with the great port appearing as little more than a synonym for "destination". The main reason for this neglect seems to lie in the sources used by previous western scholars. Their accounts of Canton’s eighteenth-century trade relied primarily on the records of the English East India Company (EIC). There was a good reason for this: by the 1760s, the Company was a major customer of Canton. Its tea trade had grown seven-fold from the 1740s to the 1760s, and its investments in tea had expanded about six-fold in the same period (Chaudhuri 1978: 510, 539). However, Paul Van Dyke’s recent research into Swedish, Danish and Dutch East India Companies’ archival sources for the eighteenth century has shed a remarkably different light on the nature of Canton’s foreign trade at the time, (Van Dyke 2002a, 2005a) one that challenges our former understanding of its size and operations. We can now quantify more accurately the size of the English Company’s trade, upon which our previous knowledge of the eighteenth-century Canton trade in general rested. Two important new facts that emerged from this quantification form the starting point of this essay. First, EIC trade represented only 27 percent of Canton’s commerce; and second, the junk trade to Southeast Asia, something until now largely ignored, comprised almost the same volume of shipping as that of the English Company. (Van Dyke 2005a: 147) If the value of the goods traded continued to favour the English shippers, the surprising size of the Nanyang trade revealed by the new data requires us to rethink the links between eighteenth-century Canton and diasporic Chinese and indigenous ports and commodity producers in Southeast Asia. Li and Van Dyke: Canton, Cancao and Cochinchina 11 This essay seeks to begin that reconsideration by examining more closely the new data on eighteenth-century Canton’s trade, and by considering the texture and structure of commerce between Canton and Southeast Asia. In so doing it will pay special attention to the interplay between trade, economic growth and socio-economic changes occurring simultaneously on these two shores of the South China Sea, among diasporic Chinese and indigenous Southeast Asians both. We begin with an overall view of the trade, focusing particularly on tea and showing how this most important of eighteenthcentury export commodities relied heavily on inputs from Southeast Asia. We will then show that these, and other key Southeast Asian commercial inputs, were largely financed by a mixture of capital from Europe and India. If scholars agree, generally speaking, that the inflows of capital, skills and population quickened the pace of social and economic change in Southeast Asia at the time, our study suggests that this phenomenon penetrated regions previously not regarded as significant for such developments. In particular, it shows that much closer, "horizontal" links existed between the Canton trade (Wong 2003; Fletcher 1995) and urban growth and political tension in the Lower Mekong region (modern southern Vietnam and southeast Cambodia), a place of considerable Chinese immigration after the fall of the Ming but nevertheless not an area that has usually been considered as significant in this respect as other export-oriented areas like Siam or insular Southeast Asia. Inputs and Outputs: Southeast Asian Commodities and Chinese Exports In this section we shall briefly sketch the role of Southeast Asian imports in some of the most important Chinese export commodities. China’s eighteenth-century leading export was tea. By the middle of the century English per capita consumption of Chinese tea was 1.1 pounds (including legal and illegal trade). But when the British government abolished most tea duties in 1784, consumption virtually doubled, to two pounds per head. (Walvin 1997: 18) Imported Southeast Asian tin played a key role in servicing this rising demand by making it possible to export increasing quantities of a commodity that was very delicate to transport. Tin and lead were the most practical and efficient insulators available to protect tealeaves in transit from absorbing moisture, acquiring strange aromas, and losing flavour due to aeration. These two metals were thus essential inputs that facilitated China's growing tea trade. All grades of tea needed to be packed in tin or lead-lined containers to preserve their quality. While tea for export was packed in lead-lined wooden chests, with some of that lead being imported from Southeast Asia, such chests were too heavy and clumsy for inland transport. Tin containers on the other hand were light and much easier to carry over mountain passes and ship down China's rivers. Producers in the tea lands therefore annually consumed large quantities of tin in the form of canisters that allowed their product to reach Canton safely and without risk of contamination. (Hanson 1876: 70-76; Fortune 1852: 197-207; Wirgin 1998: 290). But tin was not only useful for making tea canisters. As there was a strong demand for this metal in Europe at the time, European tea traders also exported much Asian tin to Europe in the form of ballast. Ballast tin could easily be re-smelted after arrival to eliminate any oxidation that had occurred during the voyage, and then sold for a profit. Ingots of tin made a firm and strong floor for the porcelain chests, while its density, resistance to water damage, and saleability in Europe, made tin a good choice for this purpose. The tin used for both tea canisters and ballast, however, had first to be imported from Southeast Asia before it could be used or re-exported in China’s tea trade. 1 While grain and sugar might be used as ballast in sailing vessels, they rarely show up in the Canton Records as anything but part of the cargo. Porcelain (in chests or bundles) was sometimes used as ballast, but water could damage it and it still required something underneath it to form a solid and level floor. Li and Van Dyke: Canton, Cancao and Cochinchina 12 As all European commercial companies’ records show, porcelain was also an important Cantonese export in the eighteenth century. Another Southeast Asian commodity played the same sort of humble but essential role in facilitating this trade as tin did for tea. Southeast Asian sago was imported into Canton in large quantities to use as loose packaging for exported porcelain. In the eighteenth century, packing porcelain in sago was one of the preferred means of preventing breakages and, like tin, the commodity could be resold for a profit in Europe. In fact, if a porcelain dealer ran short of sago he might lose sales as the substitution of other packing materials noticeably increased the risk of breakages, and in turn of pressure to reimburse foreigners for damages in transit. Indeed, if enough sago was not available porcelain shipments might be suspended until more arrived. For this reason, Danish ships often stopped at Malacca to load sago before going on to Canton, ensuring supplies for their porcelain chests. Another important Southeast Asian import that played a valuable role in China’s export market was rattan. Foreign ships took onboard large quantities of it to use as loose packaging (dunnage) in their hulls. The canes were ideal for this purpose: thin and strong, they had no aromatic qualities that could infect tea. A typical Dutch East India Company ship, for example, might use 8,500 lbs or 2,000 bundles of rattan for bracing and dunnage. Like tin and sago, rattan could also be easily resold at destination. (NAH: Canton 72) Rattan was equally highly regarded in the silk export trade. Both flexible and durable, it could be wound around the raw silk bundles to preserve their colour by keeping them tightly wrapped, while at the same time minimizing bulk compared to wooden chests which, in any case, did not protect the silk as well. (Morse 1926: I, 205-206) These three commodities are only the most significant of the Southeast Asian products that played important roles in facilitating Canton's export trade, roles which we are just beginning to understand and evaluate. One of the best places to source all these valuable raw materials was in Cochinchina (modern central and southern Vietnam) and along the nearby coast. After half a century of recurring war with the north in the seventeenth century, the first threefourths of the eighteenth century enjoyed a long truce that enabled Cochinchina to expand southwards, and enjoy an era of prosperity under successive eighteenthcentury rulers, especially Minh Vương (1691-1725), Vỡ Vương (1738-1765) and the early years of Định Vương (1765-1770). All encouraged trade. In addition to the important seventeenth century entrepot, Hội An, a number of flourishing new ports had emerged after Ming refugees began to settle in the far south in the late seventeenth century. The two most important of these were Biên Hòa (known as Đồng Nai or Longnai in Chinese sources) and Mỹ Tho. The most important of the Ming refugee ports was not in Cochinchina proper, however, but further along the coast, in the Gulf of Siam at what is now the Vietnamese-Cambodian border. This was Cancao (better known now as Hà Tiên), founded by the Cantonese Ma ̣c Cửu in the early eighteenth century. Cancao’s Chinese name [Kang Kau] indicates it was a port (港口 or 港口國) as did its Malay name of Kuala ["river mouth"]. (Brother Julian 1770: 173) Cancao was known to the Dutch for its trade with the Archipelago, supplying the latter with salt and rice during the southwest monsoon in exchange for pepper. Trading vessels were naturally driven towards Cancao by a strong ocean current that flowed through the Taiwan Straits, along the southern coast of China, around central and southern Vietnam, and then into the Gulf of 2 Using straw or chaff in porcelain chests could result in excessive breakage and there was little demand for them in Europe, where they were common. 3 If sago is not kept dry it expands and also produces damage. [Jörg 1982: 51, 86, 129] Nevertheless, it remained the best available packaging material at the time and shows up consistently in all the East India companies’ records from the eighteenth century. Li and Van Dyke: Canton, Cancao and Cochinchina 13 Siam. (Andaya 1993: 123) Three interlocking trading networks converged and overlapped at this port. The first was the trade of the Lower Mekong area and its associated Cambodia hinterland. Second, to its north, Cancao maintained close connections with the ports of southern and central Vietnam. Third, Cancao traded with the east coast of the Malay Peninsula, the Riau-Lingga Archipelago and particularly the PalembangBangka region. Most of the tin Cancao re-exported to Canton came from Chinese miners in Bangka, as we will discuss in more detail later. After a shaky start, from the 1740s Cancao was on its way to becoming the primary port of the Lower Mekong region and a semi-autonomous overseas Chinese state whose influence in southern Indochina would peak from the later 1750s to the early 1770s. (Sellers 1983, Sakurai and Kiragawa 1999, Cooke 2004a) Finally, between the two developed ports of Biên Hòa and Cancao, there also emerged some time in the mid-eighteenth-century another semi-autonomous port, at the mouth of the lower Mekong arm (the Bassac River). It was called Bassac, or Passiak in the Canton Records. The French missionary Levavasseur knew it as the port of Cambodia in 1768, when he travelled up the Bassac to Cancao via a canal linking the Mekong arm to the Hà Tiên River near modern Châu Đốc. When he passed through Bassac, Levavasseur reported seeing many more than 50 junks, large and small, waiting to load cargo there. (Van Dyke 2004a, Trịnh Hoài Đức 1820: 146; Sakurai 2004: 42; Cooke 2004c: 153, fn 18.) The large junks he saw were most likely from Canton, since a later eighteenth-century Vietnamese source reported they were the biggest of all Chinese junks (which consequently paid higher taxes than those from Fujian, Teochiu (Chaozhou) and Hainan). (Lê Quý Ðôn 1776: 31b) What we now know is that the majority of these large Canton junks sailing to Southeast Asia heavily patronised this string of ports between the 1760s and 1780s. Of the 30 or more junks based in Canton, 75 to 80 percent had a particular interest in trading with Cambodia, Cancao, and Cochinchina. It is interesting to note that, generally speaking, this was also the period between the demise of Ayutthaya, destroyed by Burmese forces in 1765, and the 1780s founding of the new Thai state based on Bangkok. It seems likely that these Cantonese junk traders suffered less from the eclipse of a major Siamese trading centre than other trading networks might have done at the time. Instead, these catastrophic political events appear to have opened an ample space in which minor ports could compete more successfully for a major commercial role. But there was much more to the Canton–Nanyang story than the bare elements sketched above. Thanks to the powerful light that the Canton Records throw on the dim and poorly understood picture of the mid-eighteenth-century Southeast Asia–Canton trade, we can now much more successfully piece together an amount of scattered and isolated evidence whose meaning had previously eluded us. As we will discuss in the next section, the picture that emerges from this process reveals for the first time a large inter-active economic zone that linked Chinese and Nanyang shores of the South China Sea to each other and to their respective mountainous hinterlands. The reason we can now see this bigger picture is because we have a better light to illuminate the critical corners of the South China Sea, where trade and production were surprisingly integrated, at a critical juncture in Southeast Asian history. Canton, the Financial Centre of Eighteenth-Century Asia Now let us turn our focus to Canton. Contrary to the longstanding perception that the Canton system was corrupt, rigid and obstructive to commerce, as Van Dyke has recently shown it was in fact arguably the most approachable commercial centre in eighteenth-century Asia, and certainly the only place in East Asia with an "open" market. The Chinese government did not discriminate by race, nationality, religion, or any other factor, but accepted everyone and anyone who wanted to trade there. All Li and Van Dyke: Canton, Cancao and Cochinchina 14 products in China were available to whoever wanted to buy or sell them, a policy the Qing government insisted on maintaining over time. Canton in the early years of the eighteenth century quickly emerged "as one of the most flexible places to negotiate business". (Van Dyke 2005a: 5) One important aspect of Canton's prosperity that was central to its growth was the port’s amazing ability to attract foreign capital. This was largely due to seventeenthcentury developments in places far distant from China. In Europe, interest rates were clearly trending downward by the end of the seventeenth century. In England and in the Dutch Republic, the two most commercially developed maritime trading countries in Europe, interest rates on bond debt had fallen by the 1710s to the point where 4 percent and 3 percent (respectively) was common. (Chaudhuri 1978: 445; Tracy 1991: 293-4) As a result, an imbalance developed between usury markets in Europe (and European colonies in the Americas) and Asia, which caused a huge quantity of silver coin to move from the former to the latter. The influx of New World silver into India, for instance, pushed interest rates there down to 7 to 8 percent by the end of the seventeenth century. Asia became such a magnet for European and New World investment capital at this time, that Chaudhuri insisted "there cannot be any question that the silver imported by the European Companies played an active and not a passive role" in Asian financial markets. (Chaudhuri 1978: 159) While interest rates in eighteenth-century Asia varied considerably from time to time, it always remained the case that Chinese merchants in Canton paid higher interest rates for capital compared to what were available in Europe and in Asian ports controlled by Europeans. Because it was officially illegal to borrow from foreigners, interest charged on foreign capital was not regulated in China. The tea trade, however, could not grow without investment capital so, in practice, Chinese officials often turned a blind eye to these transactions. And despite their notional illegality, such foreign investments were surprisingly safe: if a Chinese merchant happened to fail, the Qing court insisted any debts to foreigners be honoured by forcing other Hong merchants to shoulder the obligation. Repaying foreign investors in this way ensured they were not discouraged from returning to China. (Ch'en 1990) As a result, much foreign capital continually flowed into Canton to fund all aspects of its foreign commerce. What the Canton Records show is that much of this foreign money went into financing the junk trade to Southeast Asia. Chinese merchant houses in Canton were constantly in need of working capital, for buying tea, porcelain, and silk in China, and for financing the trade to Southeast Asia. The best, and sometimes only, source of working capital was from foreigners. The investors include Swedes, Portuguese, Spanish, Armenians, Muslims, Parsees, French, Danes, Dutch, and English, among others. These foreigners could borrow funds in Macao, Canton, or other places in Asia at 10 to 15 percent per annum and reloan the money to Chinese for 15 to 20 percent interest per annum. The investments were made either in the form of straight loans, or as bonds known as bottomry contracts. A bottomry contract was a sort of combined insurance policy and speculative small business loan that assumed all risks of sea hazard to the vessel and cargo. High risks made for high rates: the common rate in Canton for junk bottomry, for every destination except Manila, was 40 percent per annum for the length of the voyage. Bottomry bonds enabled the investors and merchants to share the risks of voyages to Southeast Asian. The following is an example of a bottomry contract made between a Swedish supercargo, Jean Abraham Grill, and a Chinese captain in 1765: Wu Heguan, captain of the junk Hingtay, borrowed 500 taels of silver from Jean Abraham Grill for sailing to Cochinchina, at interest of 40 percent. The principal and interest are to be repaid two months after the junk returns to port [Canton]. If Li and Van Dyke: Canton, Cancao and Cochinchina 15 the wind and water are not smooth [i.e. a misfortune happens], each party will accept fate and is not permitted to trouble the other. (Van Dyke 2004b) Although silver flowed continually into Canton, the demand for it was so strong that interest rates remained steadily high. So profitable was the capital market that investors could often make more money, with less risk, by financing the China trade than by trading themselves. This imbalance in rates between Canton and outside markets provided China with the incentives needed to attract a seemingly endless supply of foreign capital. As a result, a large part of the capital circulating in the Canton market never came directly from the pockets of Chinese people but from individuals who were physically thousands of miles away from Canton. Some traders continued to invest in the Canton junk trade even after they returned home to Europe or India, while other investors never even set foot in China. They depended on friends and private agents in Canton to invest the funds for them, paying a fee for those services. There was obviously good money to be made by investing in the bustling economic activities in Asia, in tea, porcelain and silk on the one end, and tin and cash-crop production at the other. (Van Dyke 2004b, 2005a) A Hokkienese merchant family operating in Canton in this period provides an excellent clue to how foreign money largely financed Chinese trade in Southeast Asia. The Yan (顏) family managed both a foreign factory called the Taihe Hang (泰 和 行) and their own junk factory, the Taishun Hang (泰 順 行). They operated six junks out of the Taishun Hang in the 1760s, which were mostly bound for Cochinchina, Bassac, and Palembang. Other Hong merchants, such as the Ye (葉), Pan (潘) and Chen, (陳) were doing much the same thing. (Van Dyke 2004b, 2005a) As Table 1 below shows, the Yan family's trade was regularly financed by foreign capital. When examining the figures, it must be remembered that they represent only a fraction of the loans the Yans were taking out from foreigners each year. And the numbers in Table 1 do not include the many bottomry bonds that the Yans took out from foreigners to finance junk voyages, which were at the much higher rate of 40 percent interest. These private transactions have been greatly under-represented in the historical literature, as have their economic significance. In July 1724, for example, when the English supercargoes arrived in Canton they found that all of the Hong merchants except “Suqua” (Chen Shouguan 陳 壽 觀) were greatly indebted to "certain Armenians". The scene was no different in the late eighteenth century when another Armenian, by the name of Matheus Joannes, captured so much of the capital market in Canton, including the financing of the trade to Southeast Asia and India, that when he Table 1: Short-term and long-term loans given to the Yan merchants in Canton by the Swedish supercargoes to finance the family trade (All figures in Chinese taels, calculated by Van