In order to do justice to the agents in the traffic, he adds in the same report on the trade for 1845—

These were the impressions of a fresh and presumably unprejudiced mind taking its first survey of the state of our commercial intercourse with China. They were reflections necessarily of a somewhat abstract character, formed on a very limited acquaintance with the actualities of a trade which did not yet exist in Foochow. A few years' experience at the great commercial mart of Shanghai widened the views of the consul materially, and showed him that there was more in this opium question than meets the eye of the mere philosopher. A confidential report on the subject made in 1852 treats the matter from a more statesman-like as well as a more businesslike point of view. In that paper he does more than deplore the evil, and while seeking earnestly for a remedy, fully recognises the practical difficulties and the danger of curing that which is bad by something which is worse.

Notwithstanding all these weighty considerations, Mr Alcock never swerved in his desire to see "the opium trade, with all its train of contradictions, anomalies, and falsifying conditions," modified, if not done away with. In a careful despatch to Sir John Bowring dated May 6, 1854, reviewing our whole position in China, he thus expresses himself:—

Nearly twenty years afterwards we find Mr Alcock still engaged on the problem how to diminish the trade in opium without dislocating both the trade and finance of India, his last act on retiring from China in 1870 having been to propose a fiscal scheme of rearrangement by which the opium trade might undergo a process of slow and painless extinction.[23]

The attitude of the British Government towards the opium trade has always been ambiguous. Succeeding to the inheritance of the East India Company as the great growers of opium, they had to carry on its traditions. These had led the Company in its trading days into some striking inconsistencies, for though they cultivated the poppy expressly for the China market, employing all the intelligence at their command to adapt their product to the special tastes of the Chinese, they yet refused to carry a single chest of it in their own ships which traded to China. By this policy they thought they could exonerate themselves in face of the Chinese authorities from participation in a trade which was under the ban of that Government. The importation of the drug was thus thrown upon private adventurers, and whenever the subject was agitated in Canton and Macao, none were so warm in their denunciations of the trade as the servants of the East India Company. This was notably the case with Captain Elliot, who, after leaving the Company's service and becoming representative of the Crown, never wearied in his strictures on the opium traffic.

The question of legalising the traffic had frequently before been considered by the Chinese Government,[24] and it was fully expected that this was the policy which would prevail in Peking in 1837. The pendulum swung to the opposite side, namely, that of prohibition, and legalisation was not adopted until 1858. But once adopted, the idea made such progress that in 1885 the Chinese Government made a successful appeal to the British Government to be allowed to treble the import duty authorised in 1858, and that the Colonial Government of Hongkong should render them special assistance in collecting it.

IV. CHINESE EXPORTS.

Efforts of the consuls to stimulate trade—Alcock's work at Foochow—His despatches—Exhibition of 1851—Exhibits of Chinese produce sent by Alcock.

The continuous efforts made by the consuls in the first decade after the treaty to stimulate the action of foreign merchants in laying hold of all the opportunities offered to them for extending their connections with the Chinese trade ought not to be passed over without notice. It was the burden of Consul Alcock's labours while in Foochow to gather information from every source, to digest it as well as he was able, and to lay it before his countrymen; and if he, in his despatches to the plenipotentiary, sometimes reflected on what seemed to him the apathy and want of enterprise of the merchants, that must be set down to a laudable zeal to make his office fruitful of benefit to his country. The same spirit animated his proceedings in Shanghai. The demand made for exhibits for the Great Exhibition of 1851 found Mr Alcock and his lieutenant Parkes eager to supply samples of Chinese products of every kind likely to be of commercial interest. On applying to the mercantile community of Shanghai for their co-operation in collecting materials, he found them not over-sanguine as to the results of such an effort, and in his despatch of December 1850 to the plenipotentiary he remarks that "the British and foreign residents in Shanghai appeared to feel that the impossibility of gaining access to the great seats of manufacture or the producing districts for raw material placed them in too disadvantageous a position to do justice either to themselves or the resources of the empire, which could only be very inadequately represented, and in a way more calculated to mislead than instruct." "The conclusion," he goes on to say, "at which the mercantile community has arrived has gone far to paralyse all exertion on my part." Nevertheless, with the restricted means at his disposal, he set to work to collect specimens of Chinese produce and industry and to transmit them to the Board of Trade for the use of the Commissioners. Of objects of art he sent a great variety in bronze, inlaid wood, porcelain, soapstone, and enamels, and the fancy articles which have since acquired such great reputation in the world that dealers in European and American capitals send out commissions every year to make extensive purchases. Colours used by the Chinese for dyeing purposes in twenty shades of blue, silk brocades, and many valuable products of the Chinese looms, were well represented, and the commoner utensils, such as scissors, needles, and razors, some of which were within the last few years specially recommended in consular reports to the notice of English manufacturers, as if the suggestion were made for the first time. Of raw material, samples were sent of hemp, indigo, and many other natural products; and when it is considered how eager the British mercantile community appeared to be to increase their importation of Chinese produce—be it tea, silk, or any other commodity—in order to balance the export trade, it is interesting to observe that in those early days a number of articles of export were described and classified, with an account of the districts of their origin, which have only taken their place in the list of exports from China within the last twenty years or so. These were sheep's wool of six different descriptions, and camels' hair, which are now so extensively dealt in at the northern ports of China. Perhaps these articles were not seen in bulk by foreigners until after the opening of the new ports in 1861, and it is worthy of remark that even after this discovery, and sundry experimental shipments, many years elapsed before the special products of Northern China became recognised articles of foreign trade. These now include straw plait, sheep's wool, goats' wools, goats' skins, dogs' skins, camels' hair, horses' tails, pigs' bristles, and a number of other articles of export which might perfectly well have been brought to the foreign market of Shanghai even before the opening of the northern ports. What was wanted was the knowledge that such products were procurable and the organisation of a market for their disposal in China, in Europe, and the United States. To stimulate inquiry into these matters was an object of the consular reports of the early days, and the fact that the seed then sown seemed to have been buried in sterile soil for thirty years affords a reasonable prospect that from the more advantageous basis on which commercial men now stand still larger developments of international commerce may be reserved to future adventurers.

V. BRITISH EXPORTS.

Slow increase—Turn of the scale by the Shanghai silk trade—Consequent inflow of silver to China—Alcock's comment on the Report of Select Committee—His grasp of the true state of affairs.

This department of trade presents little else but a record of very slow improvement, with some rather violent fluctuations due to obvious and temporary causes. In the first year after the treaty of Nanking the value of shipments to China from the United Kingdom was £1,500,000; in 1852, £2,500,000; in 1861, £4,500,000, decreasing in 1862 to £2,300,000, and rising in 1863 to £3,000,000; after which period it steadily increased to £7,000,000, at which it has practically remained, with the exception of two or three years between 1885 and 1891, when it rose to £9,000,000.

The theory of the merchants who gave evidence before the Committee of 1847, that an increase in the exports from China was all that was needed to enable the Chinese to purchase larger quantities of manufactured goods, has by no means been borne out by the subsequent course of trade. For although the Chinese exports have been greatly extended since then, that of silk alone having more than sufficed to pay for the whole of the imports from abroad, there has been no corresponding increase in the volume of these importations. What happened was merely this, that the drain of silver from China, which was deplored on all sides up till about 1853, was converted into a steady annual inflow of silver to China.[25] Consul Alcock, having been requested by her Majesty's chief superintendent of trade to make his comments on the Report of the Select Committee, dealt comprehensively with the whole question of the trade between Europe, India, and China, and evinced a wider grasp of the true state of the case than the London merchants had done. In a despatch dated March 23, 1848, the following passages occur:—

The conditions of the trade were, in fact, simpler than the merchants had imagined. The Chinese entered into no nice estimates of the balance of imports and exports, but purchased the goods which were offered to them so far as they were adapted to their requirements—and there is no other rule for the guidance of foreign manufacturers in catering for the great Chinese market.

VI. NATIVE TRADE.

Inter-provincial trade—Advantages of the employment of foreign shipping—China exports surplus of tea and silk—Coasting-trade—Salt.

The great reservoir of all foreign commerce in China is the old-established local inter-provincial trade of the country itself, which lies for the most part outside of the sphere of foreign interest excepting so far as it has come within the last forty years to supply the cargoes for an ever-increasing fleet of coasting sailing-ships and steamers. This great development of Chinese commerce carried on in foreign bottoms was thus foreshadowed by Mr Alcock as early as 1848:—

It has been said with regard to tea that the quantity sold for export is but the overflow of what is produced for native consumption, and to silk the same observation would apply. Essentially a consuming country, it is the surplus of these two articles that China has been able to afford which has constituted the staple of export trade from first to last. It is an interesting question whether there may not be surpluses of some other Chinese products to be similarly drawn upon. If the foreign trade has been distinguished by its simplicity, being confined to a very few standard commodities, such cannot be predicated of the native trade, which is of a most miscellaneous character. It is impossible to give any statistical account of the coast and inland traffic of China. Any estimate of it would be scarcely more satisfactory than those which are so loosely made of the population. In the early days, when the ports opened by the treaty of 1842 were still new ports, great pains were taken by the consuls to collect all the information they could respecting purely Chinese commerce, which they not unnaturally regarded as the source whence the material of an expanded foreign trade might in future be drawn. Especially was this the case at Foochow under the consulship of Mr Alcock and the assistantship of his energetic interpreter, Parkes. We find, for instance, among the returns compiled by that industrious officer of three months' trading in 1846, the quantities and valuations of over fifty articles of import and as many of export given in great detail: imports in 592 junks of 55,000 tons, and of exports in 238 junks of 22,000 tons. Of the sea-going junks he gives an interesting summary, distinguishing the ports with which they traded and their tonnage, with short abstracts of the cargoes carried. These amounted for the year to 1678 arrivals from twenty different places, and 1310 departures for twenty-four places; and this at a port of which the consul wrote in 1847, "No prospect of a British or other foreign trade at this port is apparent in the very remotest degree." Every traveller in every part of China is astonished at the quantity and variety of the merchandise which is constantly on the move. It is this that inspires confidence in the boundless potentialities of Chinese commerce, which seems only waiting for the link of connection between the resources of the empire and the enterprise of the Western world.

Besides the sea-borne trade of which it was possible to make these approximate estimates, there is always in China an immense inland trade; and at the time when piracy was rampant on the coast, and before the aid of foreign ships and steamers was obtained, all the goods whose value enabled them to pay the cost of carriage were conveyed by the inland routes, often indeed from one seaport to another, as, for instance, between Canton and Foochow, Ningpo, Shanghai, &c.; and it is still by the interior channels that much of the trade is done between Shanghai and the provinces to the north of it, which would appear, geographically speaking, to be more accessible from their own seaports.

The relation of the Government to the inter-provincial trade is, in general terms, that of a capricious tax-gatherer, laying such burdens on merchandise as it is found able and willing to bear. The arbitrary impositions of the officials are, however, tempered by the genius of evasion on the part of the Chinese merchant, and by mutual concession a modus vivendi is easily maintained between them.

The item of trade in which Government comes into most direct relation with the trader is the article salt, which is produced all along the sea-coast, and is likewise obtained from wells in the western provinces. Like many other Governments, the Chinese have long treated salt as a Government monopoly. As the manner in which this is carried out illustrates in several points the ideas that lie at the root of Chinese administration, some notes on the subject made by Parkes at Foochow in 1846, and printed in an appendix to this volume, may still be of interest.[26]

CHAPTER XII.

SHIPPING.

The East Indiaman—Opium clippers—Coasting craft—Trading explorations—Yangtze—Japan—Ocean trade—American shipping—Gold in California—Repeal of British Navigation Laws—Gold in Australia—Ocean rivalry—Tonnage for China—Regular traders—Silk—British and American competition—The China clipper—Steam—The Suez Canal—Native shipping—Lorchas.

Next in importance to the merchandise carried was the shipping which carried it. That stately argosy, the East Indiaman, was already invested with the halo of the past. Her leisurely voyages, once in two years, regulated by the monsoons, landing the "new" tea in London nearly a year old, and her comfortable habits generally, were matters of legend at the time of which we write. But a parting glance at the old is the best way of appreciating the new. The East Indiaman was the very apotheosis of monopoly. The command was reserved as a short road to fortune for the protégés of the omnipotent Directors in Leadenhall Street, and as with Chinese governors, the tenure of the post was in practice limited to a very few years, for the Directors were many and their cognates prolific. So many, indeed, were their privileges, perquisites, and "indulgences" that a captain was expected to have realised an ample independence in four or five voyages; the officers and petty officers having similar opportunities, proportionate to their rank. They were allowed tonnage space, the captain's share being 56 tons, which they could either fill with their own merchandise or let out to third parties. The value of this, including the intermediate "port-to-port" voyage in India, may be judged from the figures given by one captain, who from actual data estimated the freight for the round voyage at £43 per ton. The captains enjoyed also the passage-money, valued by the same authority at £1500 per voyage. There were other "indulgences," scarcely intelligible in our days, which yet yielded fabulous results. These figures are taken from a statement submitted to the Honourable Company by Captain Innes, who claimed, on behalf of himself and comrades, compensation for the loss they sustained through the cessation of the monopoly. The captain showed that he made, on the average of his three last voyages, £6100 per voyage—of which £180 was pay!—without counting "profits on investments," for the loss of which he rather handsomely waived compensation. £8000 to £10,000 per voyage was reckoned a not extravagant estimate of a captain's emoluments. The Company employed chartered ships to supplement its own, and the command of one of them was in practice put up to the highest bidder, the usual premium being about £3000 for the privilege of the command, which was of course severely restricted to qualified and selected men.

That such incredible privileges should be abused, to the detriment of the too indulgent Company, was only natural. The captains, in fact, carried on a systematic smuggling trade with Continental ports as well as with ports in the United Kingdom where they had no business to be at all, though they found pretexts, à la Chinoise, such as stress of weather or want of water, if ever called to account. The Channel Islands, the Scilly Islands, and the Isle of Wight supplied the greatest facilities for the illicit traffic, and their populations were much alarmed when measures were threatened to suppress it. The inspecting commander reported officially from St Mary's, in 1828, "that these islands were never known with so little smuggling as this year, and the greatest part of the inhabitants are reduced to great distress in consequence, for hitherto it used to be their principal employment."[27] The ships were also met by accomplices on the high seas which relieved them of smuggled goods. What is so difficult to understand about such proceedings is that the Court of Directors, though not conniving, seemed helpless to check these irregularities. Their fulminations, resolutions, elaborate advertisements, and measures prescribed for getting evidence against offenders, bore a curious resemblance to those futile efforts which are from time to time put forth by the Chinese Government, which is equally impotent to suppress illicit practices in its administration. One cause of this impotence was also very Chinese in character. The smugglers had friends in office, who supplied them with the most confidential information.

The East India Company, nevertheless, in one important respect received value for its money—in the competence of its officers. The greatest pains were taken to secure the efficiency of the service, for the ships were more than mere carriers or passenger-boats. They were maintained on a war-footing, and were manned by thoroughly disciplined crews. Many gallant actions at sea, even against regular men-of-war, stand to the credit of the Indiamen.

But what conceivable freight-money or profits on merchandise could support a trade carried on under such luxurious conditions! It was magnificent, indeed, but it was not business, and no surprise need be felt that the East India Company, while furnishing its employees with the means of fortune, made very little for its shareholders by either its shipowning or mercantile operations. The Company was a standing example of that not uncommon phenomenon, the progressionist become obstructionist, blocking the door which it opened. For many years it had played the part of dog-in-the-manger, keeping individual traders out while itself deriving little if any benefit from its monopoly. Whenever independent merchants succeeded—under great difficulties, of course—in gaining a footing, they invariably proved the superiority of their business methods; and it is to them, and not to the Company, that the development of trade in the Far East is due. English shipowners had constantly agitated for a share in the traffic round the Cape, and there were many Indian-owned ships engaged in the China trade, the Company's ostentatious abstention from carrying the opium which it grew affording this favourable opening for private adventurers.

It is somewhat surprising that the seafaring nations of the world, who were free from the restrictions which so cramped the British shipowners, should have suffered to endure so long a monopoly so baseless as that of the East India Company. The fact seems to prove the general depression of maritime energy in the early part of the century. But succeeding to such a patriarchal régime, it is little wonder that the common merchantmen, reduced to reasonable economical conditions, should have reaped a bountiful harvest. The Company's terms left a very handsome margin for shrinkage in the freight tariff, while still leaving a remunerative return to the shipowner. The expiration of the Company's charter, therefore, gave an immense stimulus to the common carriers of the ocean; though, starting from such an elevated plateau of profits, the inducements to improvements in the build and management of ships were not very urgent.

The size of the ships and their capacity for cargo underwent slow development in the first half of the century. The East Indiamen averaged about 1000 tons, some ships being as large as 1300, while those chartered by the Company seem to have run about 500 tons. All were bad carriers, their cargo capacity not exceeding their registered tonnage. In the ordinary merchant service which succeeded large ships were deemed unsuited to the China trade, 300 tons being considered a handy size, until the expansion of trade and necessity for speed combined with economical working forced on shipowners a larger type of vessel.

Of quite another class were the opium clippers, which also in a certain sense represented monopoly in its long struggle with open trade—the monopoly of capital, vested interests, and enterprise. The clippers, first sailing craft and then steamers, were able by means of the advantages they possessed to prolong the contest into the 'Sixties; indeed the echo of it had scarcely died away when the Suez Canal and the telegraph cable revolutionised the whole Eastern trade at a single stroke. The precious cargoes they carried, and scarcely less valuable intelligence, supplied the means of maintaining the opium-carriers in the highest efficiency. Every voyage was a race, the rivalry being none the less animated for the smallness of the competing field. Indeed, when reduced to a duel, the struggle became the keenest. It was only towards the close of the period that the opium-clipper system attained its highest organisation. The great China houses of Jardine, Matheson, & Co., and Dent & Co., then ran powerful steamers—the former firm chiefly between Calcutta and Hongkong—their time of departure from the Indian port being regulated so as to enable them to intercept the English mail-steamers on their arrival in Singapore, where they received on board their owners' despatches, with which they proceeded at once to Hongkong before the mail-steamer had taken in her coal. They had speed enough to give the P. and O. steamer two days on the run of 1400 miles; and making the land in daylight, they would slip into one of the snug bays at the back of the island at dusk and send their private mail-bag to the merchant-prince to digest with his port, and either lie hidden under the cliffs or put to sea again for a day or two with perhaps a number of impatient passengers on board.

The rival house of Dent & Co. devoted their energies more especially to the China coast. Their fast steamers would start from Hongkong an hour after the arrival of the Indian and English mail, landing owners' despatches at the mouth of the Yangtze, whence they were run across country to Shanghai. To gain exclusive possession of a market or of a budget of news for ever so brief a period was the spur continuously applied to owners, officers, and men. How the public regarded these operations may be inferred from a note in Admiral Keppel's diary of 1843: "Anonymous opium-clipper arrived from Bombay with only owners' despatches. Beast."

All this of course presupposed a common ownership of ship and cargo, or great liberties, if not risks, taken with the property of other people. In the years before the war this common management of ship and cargo was a simple necessity, for opium had to be stored afloat and kept ready for sailing orders. The 20,000 chests surrendered in 1839 might have been all sent away to Manila or elsewhere had that course of procedure been determined on. Captain John Thacker, examined before the Parliamentary Committee of 1840, being asked what he would have done in case the Chinese had ordered away the opium, answered, "I would have sent mine away to the Malay Islands, to exchange it for betel-nut and pepper.... I had a ship at Canton that I could not get freighted with tea, and I intended to send her away with the opium." A kind of solidarity between ship and cargo was thus an essential of the trade at that time, and what originated in necessity was continued as a habit for many years after its economical justification had ceased.

The ambition of owning or controlling ships became a feature of the China trade, the smaller houses emulating the greater. It seemed as if the repute of a merchant lacked something of completeness until he had got one or more ships under his orders, and the first use the possession was put to was usually the attempt to enforce against all comers a quasi-monopoly either in merchandise or in news. To be able to despatch a vessel on some special mission, like Captain Thacker, had a fascination for the more enterprising of the merchants, which may perhaps be referred back to the circumstance that they were men still in the prime of life.

The passion was kept alive by the inducements offered by a series of events which crowded on each other between the years 1858 and 1861. Before that time the spread of rebellion, the prevalence of piracy, and the general state of unrest and distrust which prevailed among the Chinese commercial classes, threw them on the protection of foreign flags, and the demand for handy coasting craft was generously responded to by all maritime nations, but chiefly by the shipowners of Northern Europe. Such a mosquito fleet was perhaps never before seen as that which flew the flags of the Hanse Towns and of Scandinavia on the China coast between 1850 and 1860; and many a frugal family on the Elbe, the Weser, and the Baltic lived and throve out of the earnings of these admirably managed and well-equipped vessels. The vessels were mostly run on time-charters, which were exceedingly remunerative; for the standard of hire was adopted from a period of English extravagance, while the ships were run on a scale of economy—and efficiency—scarcely then dreamed of in England. A schooner of 150 tons register earning $1500 per month, which was a not uncommon rate, must have paid for herself in a year, for the dollar was then worth 5s. Yet the Chinese also made so much money by subletting their chartered tonnage that foreigners were tempted into the same business, without the same knowledge or assurance of loyal co-operation at the various ports traded with.

The habit of handling ships in this way, whether profitably or not, had the effect of facilitating the despatch of reconnoitring expeditions when openings occurred, and they did occur on a considerable scale within the period above mentioned. The year 1858 was an epoch in itself. It was the year of the treaty of Tientsin, which threw open three additional trading-ports on the coast, three within the Gulf of Pechili, and three on the Yangtze. Of the three northern ports, excepting Tientsin, very little was known to the mercantile community, and the selection of Têng-chow and Newchwang by the British plenipotentiary shows what a change has in the interval come over the relative intelligence of the Government and the merchants; for in those days, it would appear, the Government was as far in advance of the merchants in information about China as the merchants of a later period have been in advance of the Government. These unknown, almost unheard-of, ports excited much interest during the year that elapsed between the signing of the treaty and its ratification. Information about them from Chinese sources was therefore diligently sought after.

Within a couple of miles of the foreign settlement of Shanghai—and it was the same thing in the Ningpo river—compact tiers of large sea-going junks lay moored head and stern, side to side, forming a continuous platform, so that one could walk across their decks out into the middle of the river. Their masts, without yards or rigging, loomed like a dense thicket on the horizon. Of their numbers some idea may be formed when we remember that 1400 of them were found loaded at one time in 1848 with tribute rice. Of this enormous fleet of ships and their trade the foreign mercantile community of Shanghai was content to remain in virtual ignorance. They traded to the north, and were vaguely spoken of as "Shantung junks"—Shantung then standing for everything that was unknown north of the thirty-second parallel. The map of China conveyed about as much to the mercantile communities on the coast in those days as it did to the British public generally before the discussions of 1898. These junks carried large quantities of foreign manufactured goods and opium to the unknown regions at the back of the north wind, of which some of the doors were now being opened. How was one to take advantage of the opening, and be first in the field? Time must be taken by the forelock, and a certain amount of commercial exploration entered into in order to obtain data on which to base ulterior operations. Accordingly in the spring of 1859, a few months before the period fixed for the exchange of ratifications of the treaty, several mercantile firms equipped, with the utmost secrecy, trading expeditions to the Gulf of Pechili. Their first object was to discover what seaport would serve as the entrepot of Têngchow, since that city, though near enough to salt water to have been bombarded for a frolic by the Japanese navy in 1894, possessed no anchorage. The several sets of argonauts, among whom was the writer of this book, seeking for such an anchorage, found themselves, in the month of April, all together in the harbour of Yentai, which they misnamed Chefoo, a name that has become stereotyped. Obviously, then, that would be the new port, especially as the bay and the town showed all the signs of a considerable existing traffic. It was full forty miles from Têngchow, but there was no nearer anchorage. The foreign visitors began at once to cultivate relations with the native merchants, tentatively, like Nicodemus, making their real business by night, while the magnificent daylight was employed in various local explorations. These were full of fresh interest, the Shantung coast being the antithesis of the Yangtze delta; for there were found donkeys instead of boats, stony roads instead of canals, bare and barren mountains instead of soft green paddy- or cotton-fields, stone buildings, and a blue air that sparkled like champagne.

Our own particular movable base of operations was one smart English schooner, loaded with mixed merchandise, and commanded by a sea-dog who left a trail of vernacular in his wake. Soon, however, we were able to transfer our flag to a commodious houseboat, of a hybrid type suited to the sheltered and shallow waters of the Lower Yangtze, but not, strictly speaking, seaworthy. Next, a Hamburg barque came and acted as store-ship, releasing the English schooner for more active service. The master of that craft was also a character, full of intelligence, but rough, and the trail of tobacco juice was over all, with strange pungent odours in the cuddy.

Having thus inserted the thin end of the wedge, pegged out mentally the site of the future settlement, and trifles of that sort, the pioneers of commerce waited for the official announcement of the port being opened. Meantime there was the unknown Newchwang to be discovered, at the extreme north-east corner of the Gulf of Liaotung, and for this purpose the boat aforesaid presented a very tempting facility. The trip was accomplished, not without anxiety and detention on the way by stress of weather, and the British flag was shown in the Liao river, to the best of our knowledge, for the first time in May 1859. Many other ports and harbours in the gulf were visited during the summer and autumn. Weihai-wei became very familiar, not as a place of trade, which it never was, but as a convenient anchorage better sheltered than Chefoo. How blind were the pioneers to the destinies of these gulf ports and the gulf itself! How little did they dream of the scenes that peaceful harbour was to witness, the fortifications which were to follow, the Chinese navy making its last desperate stand there like rats caught in a trap; and finally, the British flag flying over the heights!

The treaty of course was not ratified, though the news of the repulse of the British plenipotentiary at Taku only reached the pioneers in the form of tenebrous Chinese rumours with an ominous thread of consistency running through their various contradictions. The most conclusive evidence, however, of the turn affairs had taken was the interference of the officials with the native merchants and people at Chefoo, whom they forbade intercourse with the foreigners, and made responsible for the presence of the foreign ships. The ships, therefore, had to move out of sight, and it was in this predicament that the harbour of Weihai-wei offered such a welcome refuge.

To put an end to the intolerable suspense in Chefoo the Hamburger was got under weigh and sailed to the westward. On approaching the mouth of the Peiho the situation at once revealed itself: not one English ship visible, but the Russian despatch-boat America, and one United States ship, with which news was exchanged, and from which the details of the Taku disaster were ascertained. This news, of course, knocked all the commercial adventures which had been set on foot in the gulf into "pie." Nothing remained but to wind them up with as little sacrifice as possible,—a process which was not completed till towards Christmas.

The three ports to be opened on the Yangtze stood on quite a different footing. They had not been named, and their opening was somewhat contingent on the position of the hostile forces then occupying the river-banks. The navigation, moreover, was absolutely unknown above Nanking, and it was left to Captain Sherard Osborn to explore the channel and to Lord Elgin to make a political reconnaissance at the same time in H.M.S. Furious, of which cruise Laurence Oliphant has left us such a delightful description. It was not, however, till 1861 that the great river was formally opened by Admiral Sir James Hope. Trade then at once burst upon the desolate scene like the blossoms of spring. On the admiral's voyage up to Hankow, on the 600 miles of stream scarcely a rag of sail was to be seen. Within three months the surface of the river was alive with Chinese craft of all sorts and sizes. The interior of China had for years been dammed up like a reservoir by the Taipings, so that when once tapped the stream of commerce gushed out, much beyond the capacity of any existing transport. The demand for steamers was therefore sudden, and everything that was able to burn coal was enlisted in the service. The freight on light goods from Hankow to Shanghai commenced at 20 taels, or £6, per ton for a voyage of three days. The pioneer inland steamer was the Fire Dart, which had been built to the order of an American house for service in the Canton river. She was soon followed by others built expressly for the Yangtze, and before long regular trade was carried on. Again the tradition asserted itself of every mercantile house owning its own river steamer, some more than one. Steamers proved a mine of wealth for a certain time. Merchants were thereby enticed into a technical business for which they had neither training nor aptitude, and the natural consequences were not very long delayed.

While on the subject of river steamers, it is interesting to recall that in the beginning English merchants sent their orders for the Yangtze to the United States. The vessels were light, roomy, and luxurious, admirably adapted to their work. In the course of a few years, however, the tables were turned, and the Americans themselves came to the Clyde builders with their specifications, and had their river steamers built of iron. Many economies and great improvements have been made in the construction and management of these vessels since 1861, but we need not pursue the matter into further detail here.

The opening of the Yangtze made a revolution in the tea trade, for the product of Central China, which formerly was carried on men's backs over the Meiling Pass to Canton, could now be brought by water cheaply and quickly to Hankow, which in the very year of its opening became a subsidiary shipping port—subsidiary, that is, to Shanghai, where the ocean voyage began. Before long, however, this great central mart became an entrepot for ocean traffic. To the steamer Scotland, owned by Messrs W. S. Lindsay & Co. and commanded by Captain A. D. Dundas, R.N., belongs the honour of being the first ocean steamer to ascend the river to Hankow, and thereby opening the interior of China to direct trade with foreign countries. And within two years a sailing vessel was towed up the river and loaded a cargo of the new season's tea for London.

But the most interesting item in the budget of that annus mirabilis 1858 was the opening of Japan to foreign intercourse. To contemporaries it was the discovery of a new world of activity, intelligence, beauty—an elaborate civilisation built on strange foundations. Could the veil of the future have been withdrawn for the men of that day, how their imaginations would have been staggered before the unrolling of an epic transcending in human interest all the creations of fiction! But before all things there was trade to be done with awakening Japan, nobody knew what or how; while the seductive novelties of the life, the art, the scenery, and the laws contested the supremacy of the claims of mundane commerce. Here was an ideal opening for the commercial pioneer. What kind of merchandise would the Japanese buy, and what had they to sell, were naturally the first objects of inquiry. For this purpose ships with trial cargoes had to be sent hither and thither to explore, and there was work here for the kind of handy craft that had had such a run on the China coast. By their means was the foreign trade of the Japanese ports opened to the world. The clipper ship Mirage, laden with Manchester goods in which the late Sir John Pender was interested, lay several days in Shanghai waiting orders to proceed on an experimental trip to Japan as early as 1858, but the owners wisely concluded that the venture would be premature.

So far we have dealt only with what may be considered as the outriders of the host, and the subject would be very incomplete without giving some account of the main body, the common carriers of the international trade, filling by far the most important place in the economical system of the countries of their origin. While endeavouring to confine our attention as much as possible within the limits of the field embraced by the China, developing later into the Far Eastern, trade, the progress of the merchant shipping employed therein cannot be fully understood except from a standpoint more cosmopolitan. For the history of the Eastern shipping is intimately bound up with events which were taking place in other and widely-separated quarters of the globe in the middle of this century. Within the space of three to four years events happened of a world-moving character, forming the basis of the commercial revolution that has set its mark on the second half of the century. The catholicity of commerce and its unfailing inventiveness in supplying human wants were wonderfully illustrated at this time. Events so different in their nature as the potato blight in one hemisphere, the production of gold in another, and the abrogation of the Navigation Laws in England, combined within these few years to revolutionise the world's shipping trade.

In the year 1847 the world was first startled by the definitive announcement of gold discoveries in California, and four years later a similar phenomenon appeared in Australia. Coincidently with these events the first Universal Exhibition of the industries of all nations was held in Hyde Park, and whatever we may think of the relative influence of that and of the gold discoveries, there can be but one opinion as to the splendid advertisement which the Exposition lent to the golden promise of the Antipodes and the East Pacific. Thenceforth the whole world, industrial, commercial, and financial, beat with one pulse, a fact which has received constantly accumulating illustrations until the present day. It was as if the sectional divisions of the globe had been united in one great pool, forced to maintain a common level, subject only to disturbances of the nature of rising and falling waves. The new supplies of gold, by making money plentiful, inflated the price of all commodities and stimulated production in every department of agriculture and manufacture; but the time-worn yet ever-new passion for wealth, disseminated afresh throughout the civilised world, probably acted more powerfully on the material progress of mankind than the actual possession of the new riches. The rapid peopling of desert places created a demand for the necessaries of life—food, clothing, housing, tools, and appliances of every description. In a word, the tide of humanity, rushing to America for food and to the goldfields for the means of buying it, made such calls on the carrying powers of the world as could not be satisfied without a stupendous effort.

Of all nations the most responsive to the stimulus was beyond doubt the United States: it was there that shipbuilding had been making the most gigantic advances. The total tonnage afloat under the American flag bade fair at one time to rival that of Great Britain. The attention of the American shipping interest had been particularly directed towards China, where excellent employment rewarded the enterprise, not only in the ocean voyage out and home, but also in the coasting trade, which included the portable and very paying item of opium. English merchants and shipowners did not, of course, resign their share in the China trade without a struggle; but they were fighting on the defensive, and under the disadvantages incidental to that condition of warfare. Every improvement they introduced in the efficiency of their ships in order to cope with the advances of their rivals was promptly followed by a counter-move which gave the wide-awake Americans again the lead. About 1845 an important step forward was taken in the despatch of a new type of vessel from the United States to China which surpassed in speed the newest and best English ships. The British reply to this was the building of clippers, initiated in 1846 by Messrs Hall of Aberdeen. The first of these, a small vessel, having proved successful in competing for the coasting trade of China, larger ships of the clipper type were constructed, and so the seesaw went on.

Then emigration to the United States, chiefly from Ireland, made demands on the available tonnage which was indifferently met by vessels unfit for the work, and the American builders were not slow to see the advantage of placing a superior class of vessel on this important Atlantic service.

Following close on this salutary competition—East and West—came one of the epoch-making events just alluded to, the gold-mining in California, which more decisively than ever threw the advantage in the shipping contest on the side of the United States. The ocean was the true route to California for emigrants and material; but the voyage was long, and impatience of intervening space being the ruling temper of gold-seekers, the shortening of the time of transit became a crying want for the living cargoes, and scarcely less for the perishable provisions which the new ships were designed to carry. Speed, comfort, and capacity had therefore to be combined in a way which had never before been attempted. The result was the historical American clipper of the middle of the century, beautiful to look on with her cloud of white cotton canvas, covering every ocean highway. These were vessels of large capacity, carrying one-half more dead-weight than their registered tonnage;[28] built and rigged like yachts, and attaining a speed never before reached on the high seas. The pioneer of this fine fleet made the voyage from New York to San Francisco, a "coasting voyage" from which foreign flags were excluded, and returned direct in ballast, the owners realising a handsome profit on the outward passage alone. The Americans not only had the Californian trade practically in their own hands, but were prompt to turn the advantage which that gave them to profitable account in the competition for the trade of China. The ships, when empty, sailed across the Pacific, loading, at Canton or Shanghai, tea and other produce for London or New York, the three-cornered voyage occupying little more time than the direct route to China and back to which English ships were then confined. As the American clippers earned on the round about a third more freight than English ships could obtain on their out-and-home voyage, competition bore very hard on the latter. Larger and finer ships were constantly being added to the American fleet until they almost monopolised the trade not only between New York and San Francisco, but also between China and Great Britain. British shipping was, in fact, reduced to the greatest depression, the falling off in the supply of new tonnage being almost commensurate with the increase of that of the United States. A phenomenal advance was recorded also in the entries of foreign ships into British ports to the displacement of British-owned tonnage.

It was at this most critical juncture that the heroic remedy of repeal of the Navigation Laws in 1850 consigned British shipowners to absolute despair; for if they could not hold their own while protected by these laws, how were they to survive the removal of the last barrier from the competition of the whole world? But the darkest hour was, as often happens, that before the dawn. The withdrawal of protective legislation proved the turning-point in the fortunes of the British shipowner. In part it was an efficient cause, inasmuch as it threw the shipowner entirely on his own resources for his existence. He had to look to improvements in the efficiency and economy of his ships, for which it must be admitted there was considerable room. There were many conservative prejudices to be got rid of—that one, for example, which held it dangerous to have less than one foot in breadth to four in length, the adherence to which rendered British ships oval tubs compared with the American, which had for many years been proving the superiority of five and even six to one. The English axiom, which had so long resisted plain reason, had at last to yield to necessity. And so with many other antiquated conditions, including the quality and qualifications of masters, officers, and seamen.

The exertions made in Great Britain to improve merchant shipping were at once stimulated and immeasurably assisted by the gold discoveries in Australia, an island in the South Pacific more absolutely dependent on sea communication than San Francisco on the American continent had been. It was, moreover, in British territory, where no exclusive privileges could be enjoyed, and where competition was entirely unfettered. Of course the clipper fleet of the United States was prepared to do for Australia what it had done so well for California; but the prospect of the carrying trade between Great Britain and her colonies falling into alien hands aroused the spirit of the English to make a supreme effort to at least hold their own, if not to recover lost ground.

The seven seas soon became alive with rival clipper ships of great size and power, and the newspapers chronicled the runs they made to Australia and California in days, as they now record the hours consumed on steamer voyages across the Atlantic. Ancient barriers seemed to be submerged, and fusion of the ocean traffic of the world into one great whole opened the way to a new dispensation in the history of merchant shipping. Tonnage was tonnage all the world over, and became subject to the comprehensive control in which the gold and silver produced in distant countries was held by the great financial centres. But the ocean telegraph was not yet, and for twenty years more many gaps were left in the system of ocean communications, whence resulted seasons of plethora alternating with scarcity in particular lines of traffic.

There was probably no trade in which the overflow of the new output of tonnage was more quickly felt than in that of China. It became a common custom for vessels of moderate size which had carried goods and emigrants to Australia and California, whence no return cargoes were at that period to be had, to proceed to India or China in ballast—"seeking." This was a source of tonnage supply which the merchants resident in those countries had no means of reckoning upon, though such a far-reaching calculation might not be beyond the powers of a clear head posted at one of the foci of the commercial world. An example may be quoted illustrative of the local tonnage famine which occasionally prevailed during that transition period. An English ship arrived in ballast at Hongkong from Sydney in 1854. The owner's local agent, or "consignee," recommended the captain to proceed at once north to Shanghai, where, according to latest advices, he would be sure to obtain a lading at a high rate of freight. The cautious skipper demurred to taking such a risk, and refused to move unless the agent would guarantee him £6, 10s. per ton for a full cargo for London. This was agreed. The ship reached the loading port at a moment when there was no tonnage available and much produce waiting shipment, and she was immediately filled up at about £7 or £8 per ton. It fell to the lot of this particular vessel, by the way, to carry a mail from Hongkong to Shanghai, the P. and O. Company's service being then only monthly, and no other steamer being on the line. It was just after the outbreak of the war with Russia. About a couple of days after the departure of the Akbar—for that was her name—when it was considered quite safe to do so, a resident American merchant, unable to contain himself, boasted of having sent by this English vessel the despatches of the Russian admiral under sealed cover to a sure hand in Shanghai. The recipient of this confidence, like a good patriot, reported the circumstance promptly to the governor of the colony, and he to the senior naval officer, who with no less promptitude ordered a steam sloop, the Rattler, to proceed in chase of the ship. The pursuit was successful; the Russian despatches were taken out and brought back to Hongkong, where they were submitted to the polyglot governor, Sir John Bowring.

Another incident of the same period will show how it was possible for a bold operator to exploit the tonnage of the world on a considerable scale without the aid of the telegraph, or even of rapid communication by letter. One such operator in London, reckoning up the prospective supply and demand of tonnage throughout the world, foresaw this very scarcity in China of which we have just given an illustration. He thereupon proceeded to charter ships under various flags and engaged in distant voyages to proceed in ballast to the China ports, there to load cargoes for Europe. The wisdom of the operation was far from clear to the charterer's agents in China when they heard of ships coming to them from the four quarters of the world at a time when freights were low, with but little prospect of improvement, so far as they could see; but their outlook was circumscribed. Though as the ships began to arrive the difficulty of providing profitable freightage seemed to presage the ruin of the venture, yet subsequent arrivals justified the prevision of its author by earning for him highly remunerative freights. The tide had really risen as it had been foreseen; but it soon receded, and before the last charter had been fulfilled the time-factor, which is fatal to so many well-laid schemes, interposed, and probably caused the early profits to be swallowed up in the final losses.

The bulk of the China traffic, however, was carried not by these erratic outsiders but by the regular traders, which loaded in London, Liverpool, or New York with manufactured goods, coal, and metals, and returned from China with tea, silk, and other produce. It must have been a profitable business, for the average freight homeward in the 'Forties and 'Fifties seems to have been about £5 per ton; and if we allow even one-third of that for the outward voyage, it would give the shipowner somewhere about £7 for the round voyage, which was accomplished with ease within the twelve months. It must be remembered, however, that the expenses of running were proportionately high on the small vessels which were then in the trade. In the course of time, when speed and facilities of despatch at home and abroad had been further improved, the clippers from London took in Australia in the outward voyage by way of filling up the time until the tea crop was brought to market.

When the great increase in the export of silk took place a special rate was paid on it to favourite ships on account of its high value. But though this precious article could afford, when necessary, extreme rates of freight, its total bulk was too small—about one-tenth of that of tea—to affect seriously the general carrying trade of China. A certain quantity was regularly shipped by the "overland route"—that is, by P. and O. Company's steamers to Suez, and thence by rail to Alexandria, to be there reshipped for its ultimate destination, Marseilles or Southampton. But the capacity of the steamers was so small that only a pro rata allotment of space was made to applicants, and the freight charged for it was at the rate of £25 per ton. Under exceptional conditions one sailing ship in the year 1856 carried a silk cargo of 6000 bales, valued at £750,000 sterling, which was said to be the largest amount ever ventured, up to that time, in any merchant vessel. It was so unexpectedly large that the shippers were unable fully to cover their risk by insurance. A singular fatality attended the outset of this voyage, showing the fallibility of human judgment even under the most favourable circumstances. The commander of this ship had been perhaps the most successful in the China trade, and it was the extraordinary confidence that was placed in his judgment that induced the merchants to intrust to his care merchandise of such enormous value. Though much impressed with the sense of personal responsibility for its safety, he was yet tempted by a fine starlit night to break ground from the anchorage at Shanghai and drop down the river to Wusung, where he touched on the well-known bar, and was passed by the outward-bound mail-steamer the following morning. The ship was of course reported "on shore," and so the letters ordering insurance which the mail-steamer carried were rendered useless. The master, though the ship had lain but a few hours on soft mud, dared not proceed to sea with such a valuable cargo without examining the ship's bottom. To do this he had to be towed back to Shanghai, fourteen miles by river, discharge, strip off the copper, replace it, reload the cargo, and recommence the voyage. It proved much the longest she had ever made, and there was great anxiety among the merchants, especially among those of them who were only partially insured. But as fate would have it, while the ship was on the high seas her cargo was growing in value, the silk famine in Europe having in the mean time clearly declared itself; so that what with the delay of a month or two at the start and several weeks more on the passage, a time was gained for sufficient profit to accrue on the silk to lay the foundation of several respectable fortunes, and the commander, to whose error of judgment the result was due, was received in London with acclamation and with substantial gratuities from some of the fortunate owners of his cargo. The lucky craft was the Challenger, Captain Killick, which had distinguished herself in racing against the American clipper Nightingale in 1852 and 1863, and was the first sailing-vessel to load tea at Hankow in 1863,—a historic ship.

During the time of the deepest gloom in shipping circles, consequent on the repeal of the Navigation Laws, at a meeting where the ruin of the industry was proclaimed in chorus by the shipowners present, one man had the courage to rise up and stem the current of depression. "The British shipowners have at last sat down to play a fair and open game with the Americans, and, by Jove! we will trump them," were the words of Mr Richard Green, the eminent shipbuilder of Blackwall, as quoted by Mr W. S. Lindsay in his 'History of Merchant Shipping.' Mr Lindsay adds that Mr Green was as good as his word, for shortly after he built, to the order of Mr Hamilton Lindsay, a China merchant, the ship Challenger, of 600 or 700 tons, expressly to match the American Challenge, more than double her size, and thought to be the fastest ship then afloat. Though the two never met, the performances of the English, whether for speed or for dry carrying, quite eclipsed the American ship. It was with another competitor that the pioneer Blackwall clipper tried conclusions, and the circumstance suggests a somewhat whimsical association of the evolution of the China clipper with the Great Exhibition. A ship of exquisite model and finish had been built in America for the purpose of conveying visitors to that great gathering. She was put into the China trade, for which by her size she was well suited. Whether by prearrangement or not, she met the Challenger in 1852 in Shanghai, where they were both laden with tea simultaneously. Immense excitement was aroused, which took the usual form of heavy wagers between the respective partisans on the issue of the race to London. It was a close thing, as sportsmen say, the British ship coming in two days ahead of her rival. Dissatisfied, as the owner of a yacht or of a racehorse is apt to be with his defeat, certain changes were made by the owners of the Nightingale in her equipment for the next year's voyage. The race was again run from the same port, on the same conditions—and with the same result, only still more in favour of the English ship.