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HISTORY
strategically located on the trade routes of the Far East, and was soon to become the hub of a burgeoning entrepôt trade with China.
Hong Kong's development into a commercial centre began with its founding as a settlement under the British flag in 1841. At the end of the 18th century, the British dominated the foreign trade at Canton (Guangzhou) but found the conditions there to be unsatisfactory, mainly because of the conflicting viewpoints of two quite dissimilar civilisations.
The Chinese regarded themselves as the only civilised people and foreigners trading at Canton were subject to residential and other restrictions. Confined to the factory area, they were allowed to remain only for the trading season, during which they had to leave their families at Macau. They were forbidden to enter the city and to learn the Chinese language. Shipping dues were arbitrarily varied and generally, much bickering resulted between the British and Chinese traders. Yet, there was mutual trust and the spoken word alone was sufficient for even the largest transactions.
Trade had been in China's favour and silver flowed in until the growth of the opium trade - from 1800 onwards reversed this trend. The outflow of silver became more marked from 1834, after the East India Company lost its monopoly of the China trade, and the foreign free traders, hoping to get rich quickly, joined the lucrative opium trade which the Chinese had made illegal in 1799. This led to the appointment of Lin Zexu (Lin Tse-hsu) in March 1839 as special Commissioner in Canton with orders to stamp out the opium trade. - A week later, he surrounded the foreign factories with troops, stopped food supplies and refused to allow anyone to leave until all stocks of opium had been surrendered, and dealers and ships' masters had signed a bond not to import opium on pain of execution. Captain Charles Elliot, RN, the British Government's representative as Superintendent of Trade, was shut up with the rest and authorised the surrender of 20 283 chests of opium after a siege of six weeks.
Elliot would not allow normal trade to resume until he had reported fully to the British Government and received instructions. The British community retired to Macau and, when warned by the Portuguese Governor that he could not be responsible for their safety, took refuge on board ships in Hong Kong harbour in the summer of 1839.
Lord Palmerston, then the Foreign Secretary, decided that the time had come for a settlement of Sino-British commercial relations. Arguing that, in surrendering the opium, the British in Canton had been forced to ransom their lives - though, in fact, their lives had never been in danger - he demanded either a commercial treaty that would put trade relations on a satisfactory footing, or the cession of a small island where the British could live free from threats under their own flag.
An expeditionary force arrived in June 1840 to back these demands, and thus began the so-called First Opium War (1840-42). Hostilities alternated with negotiations until agreement was reached between Elliot and Qishan (Keshen), the Manchu Commissioner. (Lin had been replaced by Qishan after his exile in disgrace over the preliminaries of a treaty.)
Under the Convention of Chuenpi (Chuanbi) signed on January 20, 1841, Hong Kong Island was ceded to Britain. A naval landing party hoisted the British flag at Possession Point on January 26, 1841, and the island was formally occupied. In June, Elliot began to sell plots of land and settlement began.