Dealing in Debt: The Role of Credit in Early Sino–U.S. Trade

Abstract

This essay explores the development of Sino–U.S. commercial and arbitration practices that grew out of credit transactions and operated in relation to, but distinct from, the greater Canton system that primarily served Beijing and London. Without dismissing the importance of silver and Pacific trade goods to early Sino–U.S. trade, this essay traces the financializing trade practices and emerging regulatory strategies that rose alongside the traffic in specie and commodities. Chinese merchants who traded with foreigners at Canton became increasingly eager for U.S. specie payments as China’s imperial policies as well as Britain- and India-based traders siphoned silver away from Canton. The eagerness for American specie remittances coupled with the relationships cultivated by resident American agents like John Perkins Cushing led Chinese merchants to increasingly trade with Americans on credit. Credit transactions facilitated the expansion of Sino–U.S. trade, the movement of opium, and the entry of Chinese merchants into Atlantic commodity and capital markets. Credit transactions also presented the problem of how to enforce payment and collect bad debts. Whenever the informal personal networks they had forged to secure credit relationships proved insufficient, merchants on both sides of the globe looked to U.S. legal institutions to mediate commercial disputes. Thus, even as the silver U.S. traders supplied in Canton worked to integrate Americans more firmly into Britain’s commercial empire in Asia, credit transactions and formal and informal dispute resolutions arising therefrom carved out separate avenues of direct Sino–U.S. exchange that were of mutual interest.