Appendix.
Report on the Tea Trade,
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led to the craving desire for opium as a counter stimulant, is deserving of consideration; certain it is that strong coffee (coffeine) among the Turks, Persians, and strong tea (theine), (coffeine and theine are similar in their elementary qualities) among the Chinese are followed or preceded by the use of opium or similar deleterious stimulating narcotics. It is stated that in the manufacturing districts of Great Britain, where tea is very largely consumed at all meals, opium is now being introduced.
The statesman is bound to watch apparently minute and remote causes in their operating influence on the character of a nation, and to look more to the preservation of the physical strength and moral power of a people, than to any imaginary increase of revenue or trade from one branch of commerce. Since the commencement of the present century tea has increased in consumption per head in Great Britain more than sugar, wine, tobacco, &c., and it now amounts to more than 20 oz. per annum for each man, woman, and child. 28,000,000 people in the United Kingdom consume double the quantity of tea that is used by the whole population of Europe (including Russia), North and South America, Africa, and Asia (exclusive of China and Japan), although the duties in these countries are low, or, as in the United States, nil.
It is asserted that if the Government reduced the duty on tea, a diminution of price would follow and cause a still larger consumption of tea in England. But low prices (if such be desired) would probably not be obtained by any reduction of the Government revenue. Other causes will operate in the reduction of price. Competition among the European merchants at Canton, and the necessity for selling cotton goods and other manufactures for which tea is received in barter, has tended to maintain for that commodity high prices, but it is expected that the opening of ports contiguous to the tea districts will materially reduce the prime cost. Mr. Consul Alcock informed me at Foochow foo, that he ascertained tea could be shipped from that port at 20 per cent. less than the Canton prices. The commercial prospects of this capital of the Fokien province will be found under its distinctive head. Some tea has been shipped from Ningpo, and several cargoes from Shanghai direct for England (see Shanghai Consulate). The shipments from the latter-named port will probably increase in return for the large quantities of British manufactures sent thither. Competition will thus take place with the Cantonese, and the sale price be lowered materially. Considerable efforts have been made by the Chinese and former Hong merchants at Canton to confine the foreign tea trade to that city; and in this they have been aided not only by the possession of large capital, enabling them to make contracts with and advances to the tea cultivators and manufacturers, but also by an extensive credit which assists them to take off and dispose of a considerable quantity of our manufactures, and by the routine of old established channels which are not easily changed, and also by the promulgation of official documents and edicts arising partly from the Imperial policy of keeping foreigners at the extremity of the empire, and partly from a fear of losing the transit and other duties which tea pays during its conveyance from Fokien and Chekeang to Canton. Tea will ultimately be shipped from the most convenient port near to the place of growth, when our merchants are permitted to carry on a free and unrestricted intercourse with China, which would be far more beneficial for the Chinese than for ourselves. Chusan produces considerable quantities of superior tea, which is sent manufactured to Ningpo and other places for the use of the mandarins. Were Chusan or some contiguous island a British possession, tea would be brought from different ports of the adjacent sea coast, and thus shipped for England at a reduced cost. It is not our policy or interest to maintain the tea trade at Canton; on the contrary, we ought to promote this valuable commerce in the northern ports.
There has latterly been considerable fluctuations in the price of tea, in consequence of extravagant speculations. About the mouth of June 1839, when the intelligence of Commissioner Lin having issued prohibitory edicts against opium smuggling reached England, speculation began in tea, and was principally sustained by the operations of a wealthy retired opium dealer. Congou rose from 1s. to 1s. 5d. per lb., and this description of tea became the regulating price for all other teas.
On 1st August, news of trade being stopped at Canton reached London, and Congou advanced to 1s. 8d.; in October to 2s. in consequence of Captain Elliott's order that no British ship should go up the river to Canton. On 2d December Congou rose to 2s. 7d., it being known that hostile measures were to be forthwith adopted towards China. The stock of tea on hand in England, 31st December 1839, was 52,500,000 lbs., and the quantity delivered for 1839 was 32,366,412 lbs. On 16th January 1840, the speech from the throne announced that Her Majesty's Government considered the dispute with China national, and the price of Congou rose to 3s. 2d. per lb. The rumour of a treaty being arranged by Captain Elliott brought down prices to 2s. 9d., but on the refusal of Lin to ratify it, they rose to 3s. 2d. On the arrival of tea taken out of American ships at Hong Kong, and permission to land it, prices fell to 2s. 8d., but rose on 11th March 1840 to 3s. 2d., on rumour that a declaration of war against China had been issued by the Governor-General of India, in the name of the British Government. When it was known that no declaration of war had been issued, prices fell to 2s. Thus the fluctuation proceeded, affected by every true intelligence or false report artfully promulgated.
At the close of 1840 the stock on hand was 46,500,000 lbs., and the quantity delivered for home consumption during the year, 35,136,232 lbs., the highest prices during the year, 3s. 3d., lowest 1s. 11d. per lb. Throughout the year 1841, the speculations were continued, almost every day producing a new rumour and a rise or fall. On 17th August a dated letter was inserted in second edition of the Herald and Chronicle, which was said to have been received from Man, 27th April, and put on board the Bombay steamer after the mail and other despatches had been embarked. In this letter it was asserted that the Emperor had ordered the destruction of all teas, and that the order was rigidly obeyed, that hostilities had recommenced, and that
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Appendix.
Report on the Tea Trade.
not 1,000 chests of tea had found their way to the outer coasters by smuggling. This fraud rose prices immediately, but they fell again on the discovery of the forgery. On 31st August the stock in the United Kingdom was reduced to 29,000,000 lbs., the lowest which had taken place, and this aided the rage for speculation. The siege of Canton, its evacuation, the local truce, indemnity of $6,000,000 caused large operations in what were termed "time bargains." A gambling called "puts and calls" arose, one person purchasing from another the right of buying or selling to him at a certain price, a defined quantity of tea on a given day. The announcement that although we were pushing the war on the east and north coasts of China, the truce was to exist with Canton, and trade to proceed as usual, almost entirely checked the speculation in November and December 1841. On 31st December 1841 the stock on hand was 36,000,000 lbs., and the quantity delivered for home consumption 32,262,905 lbs.
Prices ranged for Congou from 1s. 4½d. to 2s. 9d. During 1842 speculation was slow and cautious, but the market nearly resumed its usual steady operations, and prices fell to 1s. 5d. on the arrival, 22d November, of the treaty of Nankin. The quantity consumed for the year was about 36,000,000 lbs., and the stock in hand 34,000,000 lbs.; range of prices, 1s. 5d. to 2s. per lb. for Congous.
Probably at no period since the celebrated Mississippi scheme was there ever greater and more prolonged speculation in one article. Expresses were established between Marseilles and London; large sums paid for early official information; newspapers were fed for promulgating false intelligence. At Garraway's the speculators continued this gambling in tea throughout the evening, and for a part of the night. Monied interest was transferred from the Stock Exchange to the Jerusalem Coffee-house and to Garraway's Mart. The mania spread into the country among wholesale and retail dealers in tea, and fortunes were lost and made with marvellous rapidity. The usual results ensued; the steady pursuit of trade was abandoned for the wildest gambling. Men who rose wealthy in the morning were beggars at night, and suicide, bankruptcy, and ruin to many a hearth and home closed the scene.
It behoves the Government to avoid interfering with the routine into which the trade has now subsided. Some persons still hold inferior teas, almost rubbish, that were purchased at enormously high prices during the speculation. Their only prospect of sale is a reduction of the duty, and an alteration in the mode of levying the duty, by admitting inferior teas at a lower customs rate. These persons and their agents are therefore very clamorous for an alteration in the duty to suit their purposes; but Government can look only to the public interests, and these were considered as best served by an uniform rate of duty on all teas entered after 1st July 1836.
It was attempted in 1834, when the trade with China was thrown open by the abolition of the monopoly of the East India Company, to levy ad valorem duty of 1s. 6d. per pound on Bohea, 2s. 2d. per pound on Congou, 3s. per pound on Souchong, &c. This was deemed preferable to the mode adopted previous to 1834, viz. 96 per cent. on all teas sold at or under 2s. per pound, and 100 per cent. on all teas sold above 2s. per pound; but the levy of a discriminating duty on Bohea, Congou, &c. was, after two years' trial, found impracticable, and in 1836 the uniform rate of 2s. 1d. per pound on all descriptions of tea was levied, which, with the additional five per cent. imposed in 1840, makes the total duty now levied per pound 2s. 2¼d.
The present system of an uniform duty on all teas was adopted at the urgent request of the tea brokers and tea dealers in England; and it is impossible to examine impartially the evidence taken before the Select Committee of Parliament, appointed 6th May 1834, to inquire into the expediency of establishing one fixed rate of duty, without seeing the justice of such a proceeding, no less for the interest of the public than for the advantage of the revenue.
Sir George Staunton, who was on that Committee, and possessing the largest information, truly observed that he believed the present system of a rated duty had not the support of a single individual who ever was in China. Moreover, any rated duty as to quality or price would exceedingly disturb the simplicity with which the tea trade is now conducted at Canton, where the merchant is unfettered in his purchases by any other consideration than the intrinsic goodness of the leaf he is buying. If two or more rates of duty were levied in England, inferior qualities of tea would be produced, whereas when the duty is alike on all teas, good or bad, the merchant finds it his interest to export only the good.
The consumption of tea in the United Kingdom being estimated at 45,000,000 lbs. yearly, and sold at an average price to the consumer of 4s. 6d. per pound, the money expended for tea is £10,125,000.
The expenditure of this sum is distributed as follows:
Net cost of 36,000,000 lbs. at 1s. 5d. per pound, or about 25 taels per picul, 717 taels to 1,000 dollars, or about 70d. per tael exchange dollar of 4s. 2d. to 4s. 3d. picul 133 lbs. £2,250,000 Export duty in China, $3.37 per picul, or 1¼d. per pound, about £280,000 Shipping charges, &c. in China' £25,000 Freight, &c. China to England, 2d. per pound £375,000 Insurance, a halfpenny per pound £93,000(continued)
not