[Marxism] Fwd: H-Net Review [H-Asia]: Roy on Van Dyke, 'Merchants of Canton and Macao: Success and Failure in Eighteenth-Century Chinese Trade'

Andrew Stewart hasc.warrior.stew at gmail.com
Mon Sep 25 11:48:53 MDT 2017

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From: H-Net Staff <revhelp at mail.h-net.msu.edu>
Date: Mon, Sep 25, 2017 at 1:45 PM
Subject: H-Net Review [H-Asia]: Roy on Van Dyke, 'Merchants of Canton and
Macao: Success and Failure in Eighteenth-Century Chinese Trade'
To: H-REVIEW at h-net.msu.edu

Paul Arthur Van Dyke.  Merchants of Canton and Macao: Success and
Failure in Eighteenth-Century Chinese Trade.  Hong Kong, China  Hong
Kong University Press, 2016.  xlvii + 443 pp. Illustrations.  $79.00
(cloth), ISBN 978-988-8139-32-3.

Reviewed by Tirthankar Roy (London School of Economics)
Published on H-Asia (September, 2017)
Commissioned by Sumit Guha

Chinese Merchants in the Eighteenth Century

Canton (Guangzhou) was central to Chinese maritime enterprise from
the end of the seventeenth century to the mid-nineteenth century.
During these years, a form of institutionalization of maritime trade
took shape, and large Chinese trading firms, the Qing emperor's
court, and the European companies and private traders built stakes in
it. The extensive scholarship in the field, in which the author of
_Merchants of Canton and Macau_ made significant intervention
earlier, established the general outline of what is sometimes called
the Canton system or in this book, the Canton era (p. 16). The main
elements of that system are the Qing Empire's desire to regulate the
trade and yet keep it reasonably competitive, negotiations biased to
favor large firms (European joint stock companies, or Co-hong, the
syndicate of Chinese firms through which the companies were allowed
to deal), and extensive use of trade credit. The Co-hong factor
helped standardize weights and measures, advances, and exchange
rates, thus fostering credit transactions and imparting stability to
the business done by those outside the license system--inland
merchants, for example. The general outline also shows how smuggling,
corruption, institutional weaknesses such as the inadequacies of
credit markets and bankruptcy rules, and the limited financial
capacity of some of the Co-hong firms strained the system and
contributed to its decline. In fact, as this book observes, very few
Co-hong firms survived in the mid-nineteenth century. But until then,
the Canton era formed a crucial part of Eurasian trade of the
eighteenth century, by means of which tea emerged as a mass
consumption good in the Eastern world, silk and porcelain redefined
the idea of luxury, Chinese junks developed ties in Southeast Asia,
and trade generated revenues for the state.

What is different in _Merchants of Canton and Macau_? Several things.
First, the book is focused on merchants rather than the system. As
Van Dyke puts it, "historians sometimes forget that we are talking
about real people" (p. 16). This shift of attention from the context
to the people delivers a more fluid, varied, and unpredictable
picture than we would obtain otherwise. Inland merchants and
merchants outside the Co-hong guild, for example, receive due
attention. One of the surprising results of the shift is that some of
the biggest Chinese trading firms appear institutionally quite weak
(carrying unsustainable debt), which raises the question, how did
they carry on for so long? The answer to that question is embedded in
the second contribution of the book, the rather less original thesis
that the Qing state imposed "limits to their expansion" (p. 13), even
as political connections helped to overcome the debt burden. The book
asks a counterfactual--why did the large Chinese trading firms not
expand overseas despite signs that some of them were keen to do
so?--and answers that the state discouraged such attempts, being
afraid of losing revenue and perhaps the prospect that it would not
be able to offer protection to merchants in the seas. In the end, the
rules of the game were tilted in favor of the European companies, and
the Chinese merchants operated within stricter limits. "All that
mattered was that harmony was maintained in Canton," Van Dyke writes,
and the revenues were assured (p. 15). The ambiguous role of the
state should interest those who might read a business history work
like this one to explain the emergence of world inequality from the
early 1800s.

Van Dyke's work is distinguished by the breadth of archival research
and the ability to use sources in several languages, which, among
other advantages, allows inclusion in this account of Macau under
Portuguese administration. Fifty-five pages of endnotes, long
quotations from sources, sixty-four appendices spanning over a
hundred pages, seventy-eight illustrations including photos of
documents, an eleven-page list of abbreviations, and a huge
bibliography that starts by listing the libraries and archives
visited and the material consulted (an additional twenty pages), bear
witness to the scale of the archival enterprise. Superhuman levels of
archival research have seemingly become an established tradition in
the history of the Hong merchants of Canton, thanks to Van Dyke's
other books and works such as those by Weng Eang Cheong and K. A.

The tradition comes with a cost, however. The introduction and some
of the general (nonbiographical) chapters of the book contain
statements with interesting possibilities; that is, they lend
themselves to, say, a comparative history of the Hong merchants in
Canton and the Parsi merchants of Bombay and Surat. But the books on
eighteenth-century maritime history, on both the Indian and Chinese
sides, usually run out of space trying to cope with the mountain of
papers the Europeans left behind and cannot push their work in these
directions. Why does comparative history matter? I will return to the
question at the end of the review. For the moment, let us acknowledge
the key strength of the book's method. It is a research monograph, of
course, but more than that, it is a guide to future researchers in
this specialized field.

The main text of the book contains ten chapters (excluding the
introduction and the conclusion), five of which are biographical and
five which discuss the porcelain and silk trades. The length of the
biographical chapters varies, depending on the richness of the source
material available on the family firm being studied. So does the
profile of the firms and the families described therein. The three
substantial studies are those of Swequa and brothers between 1741 and
1772 (chapter 1), Monqua and family between 1734 and 1796 (chapter
2), and most importantly, Poankeequa and family between 1748 and 1788
(chapter 3). Why is the Poankeequa case the most substantial in the
book? Because the material allows the author to draw credible and
useful generalizations about the reasons for the firm's success,
which included an ability to deal with a portfolio of European
clients; proximity to politics and skills as negotiator with
political actors, though this factor comes with the qualification
that "Qing officials used Poankeequa as much as he used them" (p.
95); and "exclusive access to Spanish silver" (p. 95). The two
briefer studies (chapters 4 and 5) are significant for they discuss
two Hong merchants with substantial interest in the inland trade.
These biographical chapters contain references to other works (like
Cheong's) that have discussed these individuals before, which show
many specific points about these families that are open to different

Two financial topics, silver and credit, bring us back into issues
that potentially link big chunks of Asian trade that engaged with the
Europeans as heavily as the Canton merchants did. Van Dyke's account
of the "success and failure" of Chinese merchants--their failure to
go to Europe, for example--is state-centric and tentative. But, of
course, there are other alternatives. That the access to New World
silver benefited the Europeans more than the Asians is a well-known
one. Van Dyke in this book casually hints at another possible story
of huge significance, but does not quite see how big it is. He notes
that "interest rates inside and outside of China remained unequal"
(p. 15), the Chinese average being considerably higher than the
European one in the eighteenth century, and possibly diverged as a
financial revolution matured in western Europe. An almost identical
statement can be made about the eighteenth-century Indian seaboard
where dramatic growth of private enterprise occurred too under a
similar impetus, namely, European interest in Indian goods and
increasing circulation of goods within Asian trade.

A possible parallel between India and China raises two questions for
comparative business history. Since the political systems of the two
regions were so different, the roots of the interest rate divergence
between Europe and Asia must be partly structural rather than
political. What were these roots? And, why did capitalism flourish at
all in regions where the cost of capital was so high? Surely there
were compensating advantages in India and China, and again, these
strengths cannot be fully explained in political terms since their
politics were so different. Questions like these call for closer
integration of the Canton trade scholarship not only with other
trading sites in Asia but also with Chinese banking and financial
history. Perhaps authors of pathbreaking books like the one reviewed
will take up that challenge in future.

Citation: Tirthankar Roy. Review of Van Dyke, Paul Arthur, _Merchants
of Canton and Macao: Success and Failure in Eighteenth-Century
Chinese Trade_. H-Asia, H-Net Reviews. September, 2017.
URL: https://www.h-net.org/reviews/showrev.php?id=48837

This work is licensed under a Creative Commons
Attribution-Noncommercial-No Derivative Works 3.0 United States


Best regards,

Andrew Stewart

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