CHAPTER 5. BOSTON MONEY MOVES WEST (1828-1845)

5.1. THE CHINA OPIUM TRADE: “THE BOSTON CONCERN

The completion of the Erie Canal in 1825 had connected New York City to the Great Lakes via the Hudson River to Albany, giving New York City a distinct economic advantage over other Atlantic seaports that had been forced to react accordingly.  From the standpoint of Chicago’s history, the most important reaction to the Erie Canal was that of Boston, that at least up to the American Revolution had enjoyed the wealth derived from being the colonies’ leading center of maritime trade and finance.  Since its founding, Boston had been forced into trade to maintain its existence due to the poor agricultural conditions of its soil and climate.  While Boston was physically somewhat closer to Europe, New York City’s location, however, was more central to the growing American population.  In addition, New York had been blessed with much better river access to the markets in the trans-Allegheny hinterland.  The Hudson River and other surrounding natural waterways into the interior gave New York merchants a substantial advantage over their Boston counterparts who were blocked from the interior by the Berkshire Mountains and, therefore, had to rely on coastal shipping to transport their goods. 

During and immediately following the Revolution, Americans found themselves cut off from their favorite beverage, tea, that had been supplied by the British East India Company.  Boston’s expertice at sailing had been developed following the end of the American revolution, when American traders found British ports in the West Indies now closed to them as they were no longer British subjects and were forced to find new ports and products to market.  Top among the new world markets now open to them as they were no longer bound by the East Indian Company’s Royal charter was China. Indicative of the change in economic leadership stemming from the Revolution.  The first ship, the Empress of China, set sail not from Boston, but from New York, to where it likewise returned from Canton in May 1785, laden with tea and silks.  The following year the first ship from New England, the Grand Turk, owned by Salem merchant Elias Hasket Derby, docked at the port of Whampoa on the Pearl River, the sole Chinese anchorage open to foreigners wishing to trade in Canton. Another Derby ship, the Astrea, left Salem in February 1789 with a 24-year-old supercargo or agent, Thomas Handasyd Perkins, who was destined to become Boston’s leading China merchant and one of America’s wealthiest men, and in the process, would establish many of his relatives with fortunes of their own, that would eventually find their way to Chicago as investments.

Thomas Sully, Thomas Handasyd Perkins, 1831. (Boston Athenaeum)

By 1792, Perkins had joined with his older brother, James, in establishing the Boston trading firm of J. & T.H. Perkins, specializing in the China trade.  In 1803 they established a permanent branch office in Canton, that within two years would be headed by their young nephew, John Perkins Cushing. However, just as the company was becoming the leading China trader in New England, Pres. Jefferson dealt a severe blow to the nation’s maritime industry on December 22, 1807 by ordering an embargo prohibiting all American ships from leaving the country for a foreign port, as a response to the ongoing British practice of stopping American ships and impressing sailors into the Royal Navy.

In addition to the logistical problems posed by the trade embargo to J. & T.H. Perkins’ China trade, hard currency and furs from the Pacific Northwest, already dwindling in number from overkilling, became increasingly short in supply, threatening the viability of trading with China.  Fortunately, a ready substitute, opium from India had become so much in demand among the Chinese masses that its profitability more than offset the losses sustained from the reduction in furs.  By 1805 the opium addiction of the Chinese had increased to the point that the drug’s quality was no longer a prime concern. The Perkinses, who had connections to lower grade opium from Turkey, began to enter the drug market.  By 1816, their drug operations were so pervasive that Cushing, their Canton agent, was reputed to have been able to control the price of opium all over China.  J. & T.H. Perkins & Co., along with a related Boston company, Byrant & Sturgis (William Sturgis was another Perkins’ nephew who had also learned his trade working in his uncles’ firm), were so successful in controlling the imports of Turkish opium that their collective actions gained them the title, the “Boston Concern.” 

FURTHER READING

Adams, Russell B., Jr., The Boston Money Tree, New York, 1977.

Hidy, Ralph W. The House of Baring in American Trade and Finance. Cambridge: Harvard University Press, 1949.

Johnson, Arthur and Barry E. Supple. Boston Capitalists and the Western Railroads. Cambridge: Harvard University Press, 1967.

(If you have any questions or suggestions, please feel free to eMail me at: thearchitectureprofessor@gmail.com)

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