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CHAPTER VII

THE COURSE OF FOREIGN TRADE

Section 1. The Active Rôle. Section 2. The Sinews of Economic Growth. Section 3. The Metropolitan Market. Section 4. Trade Rivals. Section 5. Commodities of Export. Section 6. The Trade Balance.

Section 1. The Active Rôle

ENGLAND once was' traded with.' In the East until the awakening of Japan it has always been the European trader who sought out the native and developed his overseas trade; and so for a time it was with England. Manufacture was the mainstay of the mediaeval Londoner. He lived by producing and selling objects of demand rather than by financing others or carrying goods. The bulk of his carrying trade was done by foreigners. Frenchmen, Italians, and Germans all had a hand in the domination, and the last to go were the Hanse merchants of Germany whom Elizabeth expelled from the Steel-yard in London finally in 1598. Their strength had rested on their sea-power and on their control of Flanders, England's export market, and of the Baltic rich in corn and timber. However, the subordination of England was due to immaturity only and was weakening even before Columbus discovered America. Then came England's chance. Favourably situated on the fringe of the Atlantic she jumped within a century from subordination to empire. In 1588 the young island nation sank the Armada of continental Spain and naval victory prepared the way for the foundation of the East India Company in 1600 and the settlement in 1607 of Virginia, named after England's Virgin Queen. Thus was a colonial trading empire born. As an American historian has observed, 'This desire to free England from the necessity of purchasing from foreigners formed the underlying basis of England's commercial and colonial expansion; it led directly to the formation of the East India Company and to the colonization of America.' 1

The overseas expansion of England conditioned the life and character of her people, eliciting traits both noble and mean. The noblest was the zest for discovery, whereby the new-found nation satisfied its seafaring sense. The service of the sea

1 G. L. Beer, Origins of the British Colonial System, 1578–1660, p. 57

brought danger and discipline, variety and wonder, an alternation of adventurous exposure with the quiet of haven home, and thus made a people capable at work but loathing routine and very fond of play. For the really restless peoples are the great continentals. These too are the uniform peoples, being free of island limits and so vast that only by uniformity can they function. Very appropriately, when the American frontier came to an end, the automobile was invented to take its place. But God made of England a fair and little land, whose conservation problem is the safeguarding not of forest or coal, but of her natural and historical beauties, the freshness of the one and the mellowness of the other.

Expansion also brought greed and shameful traffic. The early adventurers were seeking a new way to the treasure house of the East. Stumbling on the islands in the Caribbean Sea they called them the West Indies. Westward Ho was at first Eastward Ho, and all Europe rang with its wealth. 'Why, man, all their dripping pans . . . are of pure gold, and all the chains with which they chain up their streets are massive gold; all the prisoners they take are fettered in gold; and for rubies and diamonds they go forth on holiday and gather 'em by the seashore.' 1

But piracy led to a crime worse than itself, for which England's only excuse can be that she did not begin it and was the first to end it. The African slave trade was well established when Elizabeth's sea captain, Sir John Hawkins, wrested a share in it from the Portuguese. During the 17th century Holland struggled hard to retain her hold on the West African littoral, the source of supply, but England prevailed in Africa because she was stronger in the terminal market in which the black ivory was sold. The Barbadoes served as the distributing centre for the West Indies; and by the asiento (agreement) with Spain concluded at the Treaty of Utrecht in 1713 Great Britain wrested from France the monopoly of slave shipment to Spanish America. The West Indian planters welcomed the slaves because without their labour the sugar estates could not be cultivated; but by the middle of the 18th century the Quakers on the mainland were in revolt against the institution, and when the horrors of the middle passage (i.e. the passage across the Atlantic) became known in England, the national conscience was touched. However, it needed a great man, William Wilberforce, and a long campaign to obtain the Act of 1807 by which Great Britain abolished the traffic. Having ended it for herself she bent herself to end it for others. She pressed for abolition at the Congress of Vienna in 1814, bound France to it in the peace settlement, and coaxed 1 Eastward Ho, comedy of 1605: Act III, Scene 2. Captain Seagull speaks.

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other interested Powers into it by concessions of territory and money. With the help of her Navy and Customs service she hunted down the slavers on the coasts and rivers of Africa and by her energy saved the world from a recrudescence of the trade on a bigger scale perhaps than ever before.

The traffic in opium was not cruel as a traffic, but it was harmful to the Chinese to whom it was sent. Opium entered China from India at an early date.1 When the Chinese Government prohibited the drug, the Company prohibited the carriage of it in their vessels but were unable to stop it in vessels which they licensed. Upon the opening of the China trade in 1833 the smuggling of opium increased by leaps and bounds, constituting 53% of the entire imports of China in 1837. For the drug was insistently demanded and furthermore fulfilled a useful role in the financial economy of Great Britain and British India. Opium served as spot cash to pay for tea and silk and thus provided the long-sought alternative to the drain of silver to the East; and the big revenue derived from the cultivation of the poppy in Bengal balanced the Indian budget.

In 1837 China embarked on a campaign of prohibition, which led to high-handed treatment of British soldiers and thus to war, 'the opium war' of 1839-42, in which China was easily defeated and out of which Great Britain obtained an indemnity, trading concessions and the possession of Hongkong. China,' says a well-informed Chinese historian, 'was undoubtedly earnest in her desire to stamp out the vice that was poisoning her people ; her sole aim was to suppress the importation and consumption of the drug, regardless of the cost.'2 But he does not deny that then as formerly China was averse from trade with foreigners or that the diplomatic methods of the Son of Heaven were, to say the least, irritating. As the Emperor of China wrote to George III in 1793, 'I set no value on objects strange or ingenious, and have no use for your country's manufactures.' 3 A second war followed in 1856, and under the Treaty of Tientsin by which it was settled the import of opium at a moderate duty was legalised. For the rest of the century the opium trade was one of the many transactions in which China had to acquiesce as the Powers of Europe proceeded with the forcible opening of the Chinese door and eventually to the economic partition of China. A British Royal Commission of 1893 declared that

1 See for first reference to the traffic in the Records of the East India Company the entry under June 16, 1733-H. B. Morse, The East India Company Trading to China, I. 215.

2 Chong Su See, Foreign Trade of China, Columbia Studies No. 199 of 1919, P. 151.

Sir Frederick White, China and Foreign Powers, p. 39. What blasphemy

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China was satisfied with the opium situation and glad of the revenue which it yielded, that its abolition would be disastrous to Indian finance and hard to enforce on the Native States of India, and that the agitation against it was built on the uninstructed philanthropy of well-meaning stay-at-home Englishmen.' But China persisted in agreeing with the stay-at-home Englishman, and issued an edict abolishing by stages over a tenyear period the cultivation of the poppy and the non-medicinal consumption of opium. The British Government on behalf of the Government of India agreed to reduce Indian exports pari passu with reduction of production by China, but before this was completed China had collapsed into civil war. In 1925-6 the

Chinese war lords were financing themselves by taxes on homegrown opium. From many provinces came the report that 'the use of the drug is advancing by leaps and bounds among all classes from the wealthiest to the poorest.' 2

The analogy with the enforcement of Prohibition in the U.S.A. is interesting. In both cases the countries of supply have questioned the sincerity of the enforcing Power and harped on the prevalence of illicit traffic among the subjects of the latter. But China was weak and America is strong; and America takes measures against rum-runners which at any time between 1837 and 1914 would have involved China in certain war with one or other European Power.

In West Africa Great Britain has made amends for her slavetrading past by instituting a government that is really beneficent; for the economic improvements of the 20th century have been obtained without recourse to the plantation system and therefore without disturbance to the tribal life of the natives. But her task in China is more difficult. For she has vast interests at stake and her great commercial establishments, such as Jardine Matheson and Company, Butterfield and Swire, and the Hongkong and Shanghai Banking Corporation have a long record of peaceful and honourable trade with Chinese merchants. But China has been developed against her will; and Great Britain, as the leading foreign trader, bears the odium for a state of affairs to which all the Powers have contributed, and from which all have benefited in the past.

1 Cf. Dictionary of Political Economy (edn. 1908), III. 761, ‘Opium,' by Sir Roper Lethbridge, ex-member of the Bengal Educational Service.

2 Opium in China, Investigation in 1925-6 by the International Opium Association, Peking, p. 7.

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