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New England’s Opium Overlords

In the 1800s, a group of crafty traders amassed unimaginable riches on the back of Chinese exploitation

John Haddad
November 23, 2022
Tablet Magazine
In the early 1800s, no American trader smuggled more opium into China than Thomas Perkins. Known for aggressive risk-taking, Perkins commanded a global trading empire from his headquarters in Boston.Tablet Magazine
Tablet Magazine
In the early 1800s, no American trader smuggled more opium into China than Thomas Perkins. Known for aggressive risk-taking, Perkins commanded a global trading empire from his headquarters in Boston.Tablet Magazine
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In the first half of the 19th century, many New England merchants earned fortunes trading with China. Some of the region’s most elite families—Cabot, Lowell, Forbes, Perkins, Cushing, and Delano—enjoy this status precisely because a distant ancestor made a killing in Asia. Though today we might apply the term “old money” to these families, the money was quite new when this ancestor first acquired it. In fact, many of these men started life with very little. It was their hard work, entrepreneurial spirit, and bold risk-taking in the China trade that allowed them to climb the ladder of respectability. In this sense, they personified in the 1800s what people in the 1900s would call the “American dream.”

Or did they? Any high school English teacher will tell you that the American dream has a dark side. Yes, our literature sometimes features Benjamin Franklin types or Horatio Alger heroes who rise in the world through hard work, honesty, frugality, and so on. But American literature is also filled with characters who take morally dubious shortcuts. In Fitzgerald’s The Great Gatsby, the titular character acquires gaudy wealth fast by bootlegging. In Faulkner’s Absalom, Absalom, the crude Thomas Sutpen, determined to crash the ranks of the South’s plantation aristocracy, follows a “design” that involves acquiring droves of slaves. My English teachers, and perhaps yours too, classified these novels under “the perversion of the American dream.”

Let’s return to those New England traders. In which category should we group them? Did they make their fortunes honestly? Or was there something comparable to illegal gin or chattel slavery accelerating their rise? Sadly, there was: opium.

Before we describe the opium trade, we should first explain why it existed at all. The short version is that opium solved a very real problem, one that I can encapsulate in three short bullets:

• Western nations consumed vast quantities of tea
• All tea came from China
• China wanted almost nothing from the West

The problem, in short, was a trade imbalance. And not a small one either. In fact, it was so severe as to prompt an exchange between monarchs in 1793. After King George III formally asked the Chinese emperor to open up China’s commerce with England, Qianlong responded with a polite but firm “no.” He did offer a reason, which he couched in the language of supply and demand. Since the “productions of our Empire are manifold,” we do not “stand in the least Need of the Produce of other Countries.” China, in short, either manufactured or grew everything it needed and so did not require foreign imports. In denying King George, Qianlong did throw him a bone. Since England has an appetite for tea, porcelain, and silk, Chinese “warehouses” will remain “opened at Canton” (Guangzhou).

Qianlong did not specify what foreign traders should use for money. However, he surely meant silver, the closest thing to an international currency back then. Most silver in circulation originated in South America, where the Spanish oversaw vast mining projects aimed at extracting the ore that could be minted into coins. Though silver coins were easy to transport and convenient to exchange, they were also precious. England did not have enough silver. China’s other big tea customer, the United States, had even less.

The United States boldly entered the China trade when the Empress of China embarked in 1784. Though this vessel carried some silver, its main cargo was something that grew in the wild in Appalachia—ginseng. For American merchants, the China trade boiled down to a basic challenge. Since silver was problematic, merchants had to find something else to exchange in Canton for tea. Ginseng was the first in a long line of exotic products on which Americans pinned their hopes. Unfortunately, every exotic product, though selling well in China for a period, possessed a fatal flaw. The problem with ginseng was simply that the Chinese grew their own variety of the root, which they preferred. Merchants also transported otter furs from the Pacific Northwest and seal skins from the islands off of South America. Though the Chinese happily bought these up (and used them to make warm coats), the fur trade depended on the mass slaughter of animals that could not reproduce fast enough to keep up with demand. Thus, the fur trade was unsustainable.

So too was the sandalwood trade. Sandalwood was indigenous to Hawaii, Fiji, and other South Pacific islands. China’s appetite for the soft and fragrant wonder wood was insatiable, it being used in furniture and burned in religious rituals. When word of China’s demand got out, sandalwood mania gripped the trade. Unfortunately, the world’s supply of this tree was finite. In the space of a few years, primordial forests thousands of years in the making got chopped down. It was one of the China trade’s ecological horror stories. Resourceful traders also stole swallows’ nests from the steep ocean cliffs of Java and Borneo, because the Chinese made a coveted soup with it. And they scooped up sea slugs from their underwater habitats, because the Chinese regarded them as a delicacy, too. Obtaining exotic goods required a lot of effort and long sailing itineraries. Since none of them came close to offsetting America’s love for tea, the trade imbalance persisted.

The British at last found the great equalizer: opium from India. Unlike exotic goods, opium possessed no fatal flaw—at least not on the supply side. Opium was addictive, meaning that demand in China would never decline. And since the poppy plant, unlike sandalwood, could be harvested, supplies would never be depleted. England, in short, balanced the trade by getting the Chinese hooked on a narcotic.

American traders who wanted in on the opium trade therefore faced a barrier—English protectionism. To preserve this lucrative business for their own citizens, England forbade traders from other nations, the U.S. included, from partaking in the India-to-Canton conveyance of opium. Americans would have to find another source of poppies, and eventually they did: Turkey.

New Englanders were not the first to transport Turkish opium to China, but they achieved the most success. In the early 1800s, no American trader smuggled more opium into China than Thomas Perkins. Known for aggressive risk-taking, Perkins commanded a global trading empire from his headquarters in Boston. Somewhat ruthless, Perkins adroitly used his firm’s size and resources to crush smaller rivals. He shrewdly placed agents in the key ports and provided them with warehouses. In 1803, he sent Ephraim Bumstead to Canton along with an apprentice, his16-year-old nephew, John Perkins Cushing. Though Bumstead died, Cushing excelled at trading. From his post, he purchased tea when the price was low and warehoused it until a Perkins ship arrived. In 1815, after Perkins decided to enter the opium trade, he placed another agent in Smyrna, Turkey (now Izmir). Perkins’ ships would now stop at this Mediterranean port on their way to Canton.

Cushing lived in China for nearly 25 years without voyaging home. There he worked within the rules of what historians call “the Canton System”: he conducted business only in Canton and only with “hong merchants.” Roughly a dozen in number, hong merchants were empowered by the Qing government to broker China’s entire Western trade. This colossal economic pie did not get divided evenly. While some hong merchants failed and went bankrupt, others acquired vast fortunes. The hong merchant Houqua grew fabulously wealthy by processing close to half of China’s Western trade. No foolish risk-taker, Houqua succeeded by adopting a conservative strategy, conducting trade only with trustworthy and reliable business partners. He enjoyed a close relationship with Cushing, whom he took under his wing.

One thing that Cushing had, and that Houqua noticed, was preternatural focus. A quick study, Cushing rapidly learned every facet of the China trade generally and the opium trade specifically. He was instrumental in managing the China side of his uncle’s lucrative opium operation. Since opium was illegal, Cushing had to devise systems to circumnavigate Chinese law. In the early years, Cushing employed a rather simple system because that was all that was required. When a Perkins ship arrived with an opium cargo, Cushing would bribe Chinese officials, who would look away when the opium chests were handed to Chinese clients.

However, in the 1820s, the government’s crackdown on opium trafficking compelled Cushing to develop a more complicated system. Now when an opium vessel approached, the captain was instructed not to register the craft with Chinese authorities. Instead, he would surreptitiously anchor his vessel off a lonely island in the Pearl River estuary called Lintin. The captain would then send a small boat to Cushing’s office bearing a coded communication. Once notified, Cushing would arrange for his clients to make clandestine visits to the shadow vessel.

That was just one of Cushing’s many systems. He demoralized competitors by exploiting the fact that Perkins purchased opium in high volume. When a rival arrived in Canton with opium, he had unwittingly drifted into an artificially controlled price chamber. As he prepared to sell his cargo, he witnessed a sudden and mysterious drop in the price of opium that eliminated his anticipated profit. Unbeknown to him, Cushing had released a large quantity of his own opium into the market, driving down the price. At this juncture, the newcomer either unloaded his opium for a loss or sold it to Cushing at a discount. Once that transaction was complete, the trader would watch dumbfounded as the opium price proceeded to rise without apparent cause.

With Cushing’s systems, Perkins dominated the market for Turkish opium. In 1830, a British opium dealer reported to Parliament that Turkish opium was “almost entirely in the hands of one American house, who have nearly a monopoly.” As the heart of the firm’s success was the relationship of three powerful traders—Perkins, Cushing, and Houqua. Connected by bonds of loyalty, friendship, and financial interest, the three formed a two-way pipeline for legal and illegal commerce. From the American side, furs, silver, and opium streamed into China. In the opposite direction, tea, silk, and porcelain flowed toward Boston. As goods, drugs, and money moved between nations, the three men amassed staggering fortunes. By the 1830s, Perkins enjoyed a net worth of $1.5 million (today roughly $50 million), making him Boston’s fourth-wealthiest citizen. He was outdone by Cushing whose $2 million ($65 million) earned him second place. Their fortunes were dwarfed by that of Houqua, worth roughly $52 million by some estimates ($1.6 billion).

Opium enabled the upward mobility of other members of the Perkins clan. Probably no American handled as much of the narcotic as Robert Bennet Forbes. Though Forbes was Thomas Perkins’ nephew, there were no silver spoons in his childhood. By the time he reached boyhood, his father had already failed in life. Perkins, recognizing his sister’s predicament, took a special interest in her sons. After observing young Forbes, Perkins concluded that the boy had a sharp mind and adventuresome spirit. One fateful day in 1817, Perkins took his 13-year-old nephew on a seemingly innocent stroll along the wharf. Out of the blue, Perkins asked his nephew to pick a ship to sail on. “I am ready to go on this one,” Forbes eagerly replied. To his delight, Perkins made immediate arrangements to send him out as the vessel’s cabin boy. Forbes apprenticed under Cushing to learn the family business. On subsequent voyages, he served as second mate, then first mate, and finally as captain. He was just 20 years old.

Though captaining ships was satisfying, opium took hold of Forbes’ imagination in the late 1820s, grafting itself onto his dreams. Specifically, he aspired to captain the stealth vessel that would drop anchor at Lintin Island and disburse opium. “I had looked forward to the command of the Lintin station-ship,” he later recalled, “as the summit of my ambition.” Forbes also remembered that fateful night that his dream came true: Perkins agreed to commission a new vessel for Lintin (appropriately, if unimaginatively, named the Lintin) and install Forbes as captain. “I do not recall any night of my life,” Forbes wrote, “when I have been blessed with more happy dreams of prosperity.”

Of course, the Lintin existed solely to pump narcotics into China. Forbes’ rise required scores of Chinese to fall into ruin. And the true scope of the tragedy comes into focus when we realize that he was not an outlier. Most New England traders based their upward mobility plans on opium. Though a few secured vast wealth in China, the majority sought what was called a “competency.” Ranging from $100,000 to $200,000, a competency allowed a trader and his family to live the rest of their lives without financial worry. When we recognize that many merchants sought competencies rather than fortunes, we can understand opium’s seductive power.

Most of them did not enjoy the long voyages to China, where tedious days at sea were punctuated by foul food and rancid drinking water. In Canton, they viewed their sojourn as an exile (one called Canton a “vile hole”) and longed to go home. They deeply resented the Chinese government, which handicapped their trade by imposing the rules of the Canton System. They yearned for a more open China where they could trade at multiple ports and buy directly from the inland tea merchants. By suppressing their profits, the Chinese government retarded their progress toward that elusive goal—the competency. Frustrated, these traders looked favorably upon any commodity, even a contraband one, that could accelerate their profit-making and hasten their return home from exile. According to William Hunter, who worked for the New England firm Russell & Company, traders became addicted to opium sales much like Chinese became addicted to opium. “Transactions seemed to partake of the nature of the drug,” Hunter observed, as “they imparted a soothing frame of mind.”

When Cushing retired, Russell & Co. became the dominant firm. That was because Cushing, before he left Canton for good, engineered a merger of sorts between the firms of Samuel Russell and Thomas Perkins. According to the agreement, Perkins would continue to send ships to Canton, where Russell & Co. would handle their cargoes. As one stipulation, Russell was required to give a plum position to John Murray Forbes, Robert Bennett’s younger brother. When John Murray started in Canton in the 1830s, Houqua befriended him immediately. Prudent, circumspect, and careful with money, John Murray was the mirror image of Houqua himself. Houqua even agreed to consign all of his business to Russell & Co., on one condition—Forbes must handle his account.

John Murray Forbes, it turned out, was excellent at wealth management. He also took control of the finances of his prodigal older brother who, though talented in all things nautical, was irresponsible with money (in the 1830s and 1840s, Robert Bennett would travel to China multiple times because he kept blowing through competencies meant to last his lifetime). John Murray returned to Boston in 1836 and planned to live a quiet life managing both Houqua’s investment portfolio and his own. But word of John Murray’s financial acumen got around. Other China traders, looking for someone to invest their money, turned to Forbes. Eventually, the semiretired Forbes found himself controlling the spigot of one of the world’s largest private capital flows. Though the story is too long to repeat here, Forbes channeled a lot of this capital into railroad construction. No mere investor, Forbes actually funded, built, managed, and served as president of one of the nation’s largest rail systems—the Michigan Central.

The case of John Murray Forbes helps us understand the massive impact of New England’s China trade. By the 18th century, China had developed a vast agricultural-industrial-commercial engine to supply its own burgeoning population. When American merchants sent ships to Canton to purchase tea, silk, and porcelain, they tapped into the enormous capacity of this robust economic engine. When these same merchants sold their Chinese cargoes on the American market, they converted Chinese goods into U.S. dollars, accumulating piles of capital in the process. Not content to sit on these fortunes, they shrewdly invested it in railroads and factories. In this way, we can imagine the China trade—including its illegal side—as a mighty pump, one that transferred economic power from China to the United States. The capital from this trade fueled America’s industrial revolution and made many New England traders filthy rich.

But as New Englanders got richer, China grew poorer. That is because, by 1837, opium accounted for over half of all of China’s imports. And to pay for their opium, the Chinese spent silver. Between 1828 and 1836, opium sales drained $38 million in silver out of the economy. As China hemorrhaged silver in the south, alarms sounded up north in Beijing. In 1839, the emperor decided that the magnitude of the crisis called for drastic action. What followed was a dramatic confrontation between East and West, the short version of which goes something like this: The emperor dispatched Lin Zexu to shut down the opium trade, Americans cooperated by handing over their opium, English traders resisted and complained to their government, war ensued, England won, and China was humiliated. The resulting Treaty of Nanjing (1842) forced China to pay England an indemnity, to cede Hong Kong, to abolish the Canton System, and to open up five treaty ports for trade. Ironically, the word “opium” does not appear in the treaty, even though it had precipitated the crisis.

Opium was included in the American treaty. Negotiated in 1844 by Caleb Cushing, the Treaty of Wanghia explicitly forbade Americans from engaging in opium smuggling. Though this prohibition looked good on paper, it sadly lacked teeth in the real world. Instead of terminating their opium smuggling, the powerful New England firms actually expanded their operations. Their businesses now included the transportation of opium from India to China (England lifted this ban in 1838). Firms also engaged in coastal sales. As Thomas Layton has documented, Augustine Heard & Co. (another New England firm) adopted an extensive opium delivery system that required the coordinated movements of four ships. The Frolic picked up an opium cargo in Bombay and transported it to Cunsingmoon, an anchorage north of Macao. There the opium was transferred to the Snipe, a large receiving vessel. The small and speedy Dart, after picking up opium from the Snipe, sold opium along the Chinese coast. When it reached Shanghai, it replenished the opium inventory of a fourth vessel, the Don Juan, which supplied the Shanghai market. Augustine Heard was not the only New England firm to prosper in this new era. Robert Bennett Forbes continued his strange career by working within the similar system of Russell & Co.

One good thing about Robert Bennett Forbes (at least, from the historian’s perspective) is that he was outspoken. Thanks to his memoir and surviving letters, we can learn what he thought of his opium dealings. When Forbes was young, he does not seem to have seriously contemplated the moral consequences of his actions. That the British government and respectable New England merchants engaged in the trade legitimized it in his mind. “I considered it right,” he wrote, “to follow the example of England” and the merchants who were “exponents of all that was honorable in trade—the Perkins’s, the Peabodys, the Russells, and the Lows.” When he wrote his memoir later in life, he also shrugged off any suggestion that he had done anything wrong. Parroting the standard defense that all opium traders used, Forbes insisted that he had violated no laws. Since Chinese law extended only as far as the nation’s territorial boundaries, opium selling was perfectly legal so long as “the drug was sold on the coast, outside of the professed jurisdiction of China.” Though he conceded that opium caused some harm to users, it “had a much less deleterious effect” than liquor. If all we had at our disposal were the reflections of young Forbes and old Forbes, we could not possibly explore his conscience in a meaningful way.

Fortunately, we also have middle-aged Forbes. When Forbes was in his mid-30s, his youthful idealism had worn off, but the self-protecting tendencies of affluence had not yet set in. In 1839, Forbes wrote a letter to his wife from Canton (he was back again, trying to accumulate a second competency after wasting the first). In this latter, Forbes offered his unvarnished opinion. “I will tell you something” about the opium trade so “that you may speak learnedly.” The trade, he frankly confessed, has been “demoralizing the minds, destroying the bodies, & draining the country of money.” It was the closest thing to an admission of guilt you will ever see from an opium smuggler. Forbes closed the letter by reminding his wife that his “first fortune” had been based entirely on opium sales, a fact which complicated his message. Opium had damaged China—that much was sure. However, since it had expedited her husband’s initial rise, and was now propelling his pursuit for a second competency, she should tread gingerly should the topic come up. If possible, she should remain silent.

Other New England traders also knew to hush when the subject of opium was raised. In the 1870s, Forbes planned to write a history of Russell & Co. To get the ball rolling, he contacted over 100 former colleagues to solicit their recollections. The response was underwhelming. Warren Delano Jr. of Massachusetts—Franklin Delano Roosevelt’s grandfather—sent a skeletal outline of his career with Russell that made no mention of his extensive opium dealings. That was one of the better submissions. Why had these ex-traders adopted a close-lipped policy? In the 1870s, these men headed prominent families and enjoyed reputations as philanthropists who backed many of the social causes of the day. They had achieved the wealth and respectability of the American dream. With their collective silence, they sent Forbes an unmistakable message. Nobody wanted to revisit the controversial past. Nobody wanted to talk about where the money came from. Their reticence prompted Forbes to rethink the book. “The only thing I fear,” he admitted to Delano, “is that in giving a sketch of the causes and effects of the opium traffic … I may say too much.” In the end, Forbes abandoned the project. When he did, his former colleagues probably sighed with relief.

John Haddad, Ph.D., is Professor of American Studies at the School of Humanities at Penn State Harrisburg