-Caveat Lector- an excerpt from: Bonds of Enterprise John Lauritz Larson President and Fellows of Harvard College©1984 Harvard University press ISBN 0-87584-155-4 257 pages – First Edition -- Out-of-print In-print from: McGraw-Hill Companies ISBN: 0071032797 --[1a]-- 1 The Liberal Merchant THE OPENING DECADE of the nineteenth century was charged with conflict and opportunity. The nations of Western Europe had been at war almost continuously for a generation. Democratic revolutions in America and France had shattered the foundations of divine right monarchy and traditional social hierarchy. At the same time commercial men had outgrown the boundaries of crown empires and mercantilist economies, launching a revolution in trade and industry. By 1800 the interests of free trade and republicanism, empire and monarchy, were being reflected imperfectly in the Napoleonic wars. No member of the Atlantic community could escape the seaborne struggle between England and France—two great eighteenth-century powers fighting for control of the new age ahead. Technically neutral but inevitably partisan, Americans were bitterly divided in their support for the French or British cause. Into this war-torn sea, in January 1811 a young Boston woman set sail with two small boys aboard a schooner full of cod, bound for France and reunion with her merchant husband. Besides enduring the hardship and fear that accompanied a transatlantic passage before the age of iron and steam, Margaret Perkins Forbes traversed a battlefield. Intercepted in March by a British warship, the schooner was finally landed several weeks later on a small barren island off the coast of France. From there Margaret Forbes was delivered to Ralph Bennet Forbes; they continued in Europe on business. Late in 1812 the family took up housekeeping in Bordeaux and there, on February 23, 1813, the exiled Margaret gave birth to her third son, John Murray Forbes. The unfortunate child was barely three months old when he endured his own first crossing of the violent Atlantic and was deposited in Boston nearly dead from hardship and the laudanum employed to quiet him. It was an inauspicious beginning.[1] John Murray Forbes was destined to see eighty-five years of the tumultuous century he had entered; he would play an active role in the century of "progress" for seven decades. Throughout his long life he wrestled with the contradictions that marked Napoleon's France at his birth. He perpetuated until his death an eighteenth-century style of business, emphasizing family connection, personal responsibility, and the traditional conservative views of the Boston mercantile clan into which he was born. At the same time he indulged with enthusiasm a dynamic urge toward innovation, pressing onto the frontiers of America's industrial development, breaking down the barriers of time, space, and tradition that were the containers of the older "community" he loved. Forbes came to revere the democratic republic as the only type of government to which a virtuous citizen owed allegiance, yet he remained by temperament an aristocrat, impatient with the tendency of the mob to challenge its natural leaders. Above all he was. an entrepreneur, a title eminently suited to men of the nineteenth century. He was a leader among those in Europe and America who transformed the operations of the shopkeeper and the merchant prince into a system of world capitalism that would one day rival civil government as the organizing principle of society. John Murray Forbes was one of those American entrepreneurs who engineered the cultural transformation of the nation from that of Thomas Jefferson to that of J. Pierpont Morgan. He loved progress even as he mourned its corrupting influence on individuals and society. A MERCANTILE YOUTH John Murray Forbes was born into a close community of Boston merchants whose wealth and influence had been established in the decades surrounding the American Revolution. The Forbes line descended from a Scottish clergyman named John Forbes who had settled in the home of his bride, Dorothy Murray of Milton, Massachusetts, in 1773. John Murray Forbes's mother was Margaret Perkins, younger sister of the wealthy importer, Colonel Thomas Handasyd Perkins. The marriage of Ralph Forbes and Margaret Perkins was the foundation of the Boston Forbeses and the crucial link with an expansive and prosperous trading family. Of the eight children born to Ralph and Margaret Forbes, all three sons—Thomas Tunno, Robert Bennet, and John Murray—served their apprenticeship in the Perkins counting-house and entered the China trade. The boys' father had never joined the Perkins firm, but instead sought his fortune in independent ventures. Plagued in early life with recurrent gout (some said from too much drink), he was never a good provider. The proud and industrious Margaret managed a frugal household with the help of her sons and such aid from the Colonel as her pride would allow. As a child, John Murray knew his father only as an invalid who failed to provide while his mother and brothers struggled for a living. Ralph Bennet Forbes died in 1824, leaving eleven-year-old John with an ambivalent grief for the man who never secured the independence his mother craved.[2] As a consequence of their father's ill fortune, the Forbes boys were early put to work. After five years' training in the Boston store, eighteen-year-old Thomas was stationed in China for Perkins & Co. Bennet, a year younger than Tom, went before the mast at the age of thirteen and took over his first command at twenty. Their contributions to the family purse allowed young John a more formal education before taking up his working life. He was enrolled, at brother Tom's expense, in the experimental Round Hill School that had been recently opened in Northampton, Massachusetts.[3] Round Hill was a middle school for boys that combined a classical curriculum with heavy emphasis on sport, games, and nature study. Its founders, George Bancroft and J. G. Cogswell, envisioned the school as a liberating alternative to the restraints of Harvard College and the Cambridge intellectual community. They settled on a pastoral estate outside Northampton where they hoped to fuse the timeless moral virtues of the classics with the democratic promise of American country life. From their retreat would come young gentlemen of integrity and mental refinement without the pretensions of the class-ridden city system. John Murray Forbes was among the first scholars at Round Hill in October 1823.[4] Forbes was a precocious boy. Although he loved sport, he was generally serious-minded and too eager to grow up. He had been introduced to the role of merchant at the age of eight when his brother sent him small shipments of Chinese trinkets, which he dutifully reported sold "very well" in Milton village. While at Round Hill he declined his mother's offers of cake and sweetmeats in favor of "manly things." He read all his brothers' letters home, so that he might keep up with family affairs. When his brothers were both abroad, the ten-year-old boy assumed an attitude of grave family responsibility, offering copious advice to his mother and sisters as the male voice in the fatherless household.[5] For young Forbes, the Round Hill experience produced more character than intellectual attainment. Throughout his life he extolled the virtues of gymnastic and field sports, and he treasured the personal models of Cogswell and his tutors. No doubt the greatest advantage of the school for Forbes lay in the few years of freedom it gave him before sinking into the routine of trade-time to be a boy growing. Here he internalized the virtues of duty and fair play. He drew from that environment both a sincere devotion to moral right and a practical energy more suited to the world of men. In later years Forbes freely blended the "eternal truths" that had inspired his tutors with the shrewd calculations of a practical man of business; the combination often resulted in a double standard, but it never produced a crisis of confidence.[6] Duty seemed uppermost in the mind of the youth as he contemplated his future career. As a poor boy dependent on family connections, his calling was never really open to question. At the end of Forbes's five years at Round Hill, Headmaster Cogswell recommended him for the mercantile life, and the youth seemed instinctively to understand his destiny. He had known for years that his fortune lay, if anywhere, in trade. Now in 1828 he admitted that "whether I went into the Perkins's store in Boston or not, I must end by -going to Canton." Plagued by the image of his father's failures and already indebted to his brother, the young man felt an urge toward independent wealth which he tried to explain to Thomas: It is true that it must be painful to me to leave all our friends here, but I feel that it is better to make any sacrifice than to be a useless member of our family.... I almost envy you the pleasure of being able to render one so dear [his sister Emma] to us all independent, and hope most sincerely that, if fortune is favorable to me, it may be my first pleasure, as it is yours, to share it with those I love. It was decided in October of 1828 that John, then fifteen, would leave what he called the "aristocratical and free-thinking government of Round Hill" and enter the house of J.&T.H. Perkins to learn something about the more regulated world of business. Within a year he was bored with sweeping the store and wearing out shoes "for the service of P. & Co." He was chafing to get aboard a Canton packet.[7] While biding his time in the Perkins store, Forbes studied his own personal development with clarity and detachment. To his brother Tom in August 1829, he wrote with growing impatience of his immaturity and unsettled prospects. He despaired of his constantly shifting "tastes and views," which seemed to alter with every change of place and habits, and which had been sharply jolted since his introduction to trade. Philosophically he assumed that a trip to China would bring yet another shock. The depressed conditions of trade just then, and the business failure of certain friends of the family, had momentarily dimmed his natural optimism. In fact, he thought there was a "poor chance for the coming generation," which he supposed must be content to "work hard and get little." Recoiling from the gloom, he looked for as good a chance for happiness in "passing our lives this way as in any other if we are only willing to do so." Certainly there was a better opportunity in Canton of learning the "principles and practice of trade and of becoming a merchant in a liberal sense of the word." On the other hand, would the connections formed in Canton serve him as well in later life as those he would give up in Boston?[8] The whole burden of young Forbes's uncertainty was thrown on his brother. While he waited the winter months of 1829 for advice and guidance, he could not have known that his letters were never read. A typhoon had carried off brother Thomas, and the news of his death would throw a green and impressionable John Murray Forbes directly into the exotic bustle of the Canton factories. Opium: THE CHINA CONNECTION By the time Forbes sailed for Canton in 1830, the China trade had accumulated a long and troubled history. It was inherently one-sided: Europeans and Americans wanted Chinese teas and silks, but these Western "barbarians" had little of value to offer the Celestial Empire. Early Western traders depended on cash transactions or tried to force their wares on the Chinese market. By the early years of the nineteenth century the systematic development of the opium trade had corrected this structural imbalance and prevented a serious specie drain to the Orient.[9] At the same time, Western commercial economies were beginning to realize the possibilities of an expanding world commerce in which the circulation of goods and the flow of wealth became the sources of profit. In this emerging worldwide commercial network, the China connection took on even greater importance as a point of exchange and a generator of capital for the industrialization of the West. The Chinese concept of trade derived from tribute rather than exchange; the imperial court misunderstood Western commerce, and the mercantile class was despised by the official bureaucracy. Foreign trade in China was carried on through the Hong merchants who made up the monopolistic Cohong. The Cohong system was devised to insulate the empire from contamination by limiting contact with the barbarian outside world. By 1745 the Hong merchants were responsible for their own commercial conduct and the behavior of foreign traders. After 1760 European trade was restricted to the port of Canton and handled exclusively by the merchants of the Cohong.[10] As they evolved their dual role in government and private trade, the Hong merchants became the primary intermediaries between the imperial court and foreign entrepreneurs. They set prices, sold goods, provided and leased the factories (warehouses), managed banking and exchange-in short, they governed all commercial aspects of the trade. Yet the Hong merchants acquired their lucrative monopoly at a great cost in personal liability. They were expected to restrain foreigners in China, to act as interpreters, guarantee duties and control smuggling, support local militia and schools, and "make all manner of presents and contributions to the authorities far and near." (The "squeeze" or graft required by the bureaucrats frequently bankrupted the Hongs.) While official court policy denied the importance of foreign trade, by the late eighteenth century it had become a necessary source of wealth for officialdom at every level. The merchants of the Cohong served uneasily as both a channel and a barrier for commerce with Western nations.[11] In the foreign quarter outside the city wall, three major interests maintained their own uneasy harmony. The Honourable East India Company was the entrenched British monopoly in the Far East, maintaining the official trading concession at Canton as well as full government control in much of India. Outside the East India Company, and increasingly important to its revenues, were the "country traders"—private British and Indian merchants who operated within the Asian circuit but were prohibited from the main arterial trade with London. Finally the Americans, largely dominated by the Boston house of Perkins & Co., ran ventures through the gaps and outside the boundaries of this British colonial system with growing success. Forced into cooperation by the sometimes baffling attentions of Chinese officialdom, by the 1820s each of these competing elements had developed a unique role in the Asian network that rendered it indispensable to the others. The British monopoly provided the original foundation for the system. The East India Company had maintained the only agency in Canton until the last years of the eighteenth century, by which time it exported almost nothing but tea to Great Britain. The company had been forcing British woolens and other goods on the Chinese market, always at a loss, to pay for a fraction of its tea investment. The balance came from specie. In the last decades of the century the East India Company discovered that the produce of India-raw cotton and opium-commanded a steady market in China. By 1804 the Indian connection was reversing the flow of treasure to the Orient. The East India Company tried several times to engage in this Indian "country trade" itself but eventually gave it up to licensed merchants living in India. Like the Canton business, the country trade was in chronic imbalance, leaving large funds in Canton to be remitted to India. A triangle was formed when the East India Company began selling its bills on London or Bengal for the cash receipts of these private merchants at Canton: The cash was used to purchase teas for London and the bills conveniently remitted private funds back to India or home to England.[12] This arrangement suited the East India Company but it barred private merchants from engaging in the full spectrum of profitable ventures in China. It fell to private British and American shippers to begin forcing open the business. First working under the cover of foreign diplomacy, a number of Scottish traders established agents in residence at Canton and offered banking and commission services (though not direct trade) in competition with the monopoly. After 1813 direct trade with India was thrown open, and the Lancashire exporters discovered the same profitable triangle through the private agencies in Canton. In a similar manner, Americans established a foothold in Canton in the first years of the new century and, along with commercial services and a fair quantity of specie, they brought American bills on London which provided a competing financial instrument.[13] John Murray Forbes's uncle, Thomas Handasyd Perkins, was a major figure in the American link. Perkins had entered the China market with furs and exotic goods from the Pacific Islands. By 1805 this market was saturated and, barred from the Indian opium trade, Perkins turned to Turkish opium. He quickly discovered that the East India Company's restrictions could be used as a shield for an American monopoly in the Turkish drug. Idled at Canton by the British blockade after 1812, Perkins's nephew John P. Cushing worked out a tidy mechanism for regularized smuggling once the war was over. The system removed Perkins & Co. from direct involvement with the drug, in deference to Howqua, the influential Hong merchant whose confidence Cushing enjoyed. The business was further sanitized, after an imperial crackdown in 1821, by the adoption of the storeship or "Lintin" system, which shifted actual smuggling entirely to Chinese hands.[14] Together, the country traders and the Americans gradually undermined the East India Company's monopoly at Canton while providing indispensable services to that firm's Eastern operations. Because of its official and diplomatic status the East India Company steadily dissociated itself from the drug traffic upon which its solvency depended. This policy simply strengthened the private agencies in China, while each concession to freer trade engendered more pressure to drop the barriers. After 1820 the Perkins house exercised its advantages to consolidate the American branch of the opium trade, drawing together the major trading families of Boston—Sturgis, Cabot, Bryant, Higginson, Cushing, and others-into a worldwide network of kinship and commercial enterprise.[15] Ultimately what displaced the old British monopoly in China was not competition alone, but the evolution of a new business system—the system in which John Murray Forbes would learn his trade. Between the old structures of the charter monopoly and the private ship's venture (where the voyage was the enterprise), these innovators in China erected the agency or commission house. In contrast to the "supercargo" who sailed with the ship, the agent remained behind to perform essential services for others. These agency houses established the skeleton of commercial capitalism on the fringes of a reluctant society. The resident commission merchants became bankers, bill brokers, insurers, freighters, shipowners, buyers, and sellers for merchants from all over the world. Such agencies were soon able to manipulate the market, holding off sales or stockpiling teas out of season, sifting fragments of information about markets, and smoothing the curves of supply and demand. By charging commissions on each service, men of small capital grew rich sharing the profits of their clients' investments. The agents then loaned their own earnings at interest or invested in ships and cargoes that brought new revenues to their houses. Because everyone's profit in these arrangements depended on the judgment and ability of the agent, success tended to consolidate the trade in the hands of closeknit groups, often blood relatives, whose worldwide connections gave them the best credit and freshest information.[16] In this lively new system a cumbersome monopoly like the East India Company was at a positive disadvantage because it discouraged volume. The new merchants, like John P. Cushing, tried to corner the market for information and services while drumming the volume of trade constantly higher. By the middle of the 1820s Cushing was the preeminent American in Canton and the practical master of the Turkish opium market. Besides heading the Perkins house, Cushing was a partner in James P. Sturgis & Co., which handled the Turkish trade; he also supported Russell & Co., which specialized in Indian opium and the old country trade. After twenty-five years of pioneering in this market Cushing finally pronounced the system secure. In 1828 he set sail for home, leaving the China business in the hands of Thomas T. Forbes.[17] CANTON APPRENTICESHIP Thomas Forbes was lost at sea in August 1829, but the news of his death did not reach Boston until the following February. John Cushing had left Tom to command the firm in Canton without so much as an apprentice training. Tom had also been the financial mainstay of his family, keeping his mother comfortable and paying his father's old debts. In time both roles would fall to John Murray Forbes, but for the moment he was still a boy, and temporary arrangements had to be made. Russell & Co. took up the Perkins business after Tom's death, and Cushing sailed directly from Europe the following spring to prepare a place for the younger Forbes. John was to leave from Boston that summer with Augustine Heard, a junior partner in Russell & Co. Seventeen years old, eager to shoulder the burden but deeply saddened over the loss of a brother who was perhaps more of a father to him, Forbes set sail for China on July 7, 1830.[18] Forbes had not resolved his own uncertainties about going to China, and he considered this first trip a temporary expedient. Cushing had secretly arranged for him to receive a partner's share in Russell & Co. at the beginning of the new term; but upon his arrival, Forbes was installed as a clerk. His only advantage over a simple apprentice was his introduction to Howqua, the wealthy head of the Cohong. Cushing and Thomas Forbes had been personal agents for the old Hong merchant, conducting his large overseas business for a handsome fee. Howqua accepted John as their replacement, and by his own account Forbes was soon chartering ships and sending off thousands of dollars in trade goods, carried in his own name, for the account of Howqua. He took to the business quickly, receiving and dispatching shipments and writing in triplicate the innumerable letters that were the primary instrument of business. His youth was partly masked, as he put it later, by "the appearance of being much older" (he was balding already), and he was soon "playing a man's part."[19] For just over two years the young clerk remained at Canton mastering the routine operations of a commission house until he became ill in 1833, and he was sent home to recover. Among his several anxieties during this period was the want of a wife, a situation he rectified with remarkable haste eight months after landing in Boston. He was quietly married in February 1834 to Sarah Hathaway, one of twin daughters of a solid Quaker family in New Bedford. It was a lucky and permanent match, one that lasted sixty-four years, but it was rudely interrupted in the first month by Forbes's sudden return to China. Marriage had only increased his need for a career. Convinced that his China training was "entirely different from anything wanted for business in this country," Forbes seized an opening in another China voyage. The house of Bryant & Sturgis had offered him the position of supercargo on the ships Logan and Tartar, in turn. He sailed on March 7, 1834, still ignorant of his share in Russell & Co. and planning to return to Boston with the Tartar and perhaps take a place in the Perkins firm.[20] Forbes's absence, however, was not to be a short one. Others had made a place for him in Canton that he could not refuse, and his mercantile career was firmly established during his second stay in China. Howqua had urged his return because, he said, Forbes understood him better than any other foreigner. The old gentleman assured John's brother Bennet that John would accumulate "all that he will require in a reasonable time & return to his family and friends before he is many years older." When John arrived in Canton the second time, Howqua offered him a 10 percent share in all his ventures handled in Forbes's name. Furthermore, Forbes discovered his partnership in Russell & Co., which already amounted to $14,000. Profits as supercargo seemed far less promising, and finally, Augustine Heard became ill and threatened to die in harness unless John stayed to help manage Russell & Co. Faced with these surprisingly good offers, Forbes informed the captain of his ship that he was "half tempted to do a wise thing and stay."[21] Unable to wait the long months for advice from home, Forbes weighed his options carefully and finally accepted the offer of Russell & Co. He informed his personal connections in October 1834 that their business should be addressed to the house. Howqua brought his large trade to the firm at a flat 2 percent commission, although it was still done in Forbes's name because the real owner of the property required secrecy for his trading abroad. With the decision made, Forbes agonized over his choice and put off for months the delicate task of explaining to Sarah why he was not coming home. When he finally sat down to write, it was status, not wealth, that governed his thoughts. "You must recollect," he explained, "that though I had the entire confidence of my friends before, yet to others I was only known as a clerk and a very young man." He thought supercargoes were "dog cheap," and without more responsibility on his shoulders he could not gain confidence in himself. Having become a partner in the most respectable American house at Canton, however, he had "acquired a confidence that would enable me to undertake any business in any part of the world.[22] The multitude of personal hardships notwithstanding, Forbes had chosen to stay in China because at last he was becoming a "merchant in a liberal sense of the word." These personal sacrifices were not made lightly, for John Forbes did not enjoy life in Canton. The isolation in a hot, wet, unhealthy climate, surrounded by the squalid poverty of the Chinese and the condescending attitudes of the Mandarins, left him cynical and depressed. Western merchants—"foreign devils"—were crowded into their compound on the banks of the river with little to amuse themselves besides schoolboy games and sailing. Forbes complained frequently of boredom and feared for his physical and mental health. He grumbled fiercely over trifles regarding servants and petty thieves and feared he was "constitutionally irritable," having developed a "morbid desire to be let alone." Business secrecy circumscribed all society outside the house, and since the Chinese, with certain loyal exceptions, were assumed to be vicious scoundrels, the mental strain of loneliness was severe. Forbes longed for home and the society of friends and loved ones. By the summer of 1836 he complained of a "tomb-like feeling about Canton."[23] Canton must have seemed a crucible of mankind's vices to a proper Bostonian. The flagrant graft and the whims of the arrogant Mandarins offended Forbes deeply. The plague of beggars outside the compound wall outraged and sickened him, but the exercise of charity toward one of them produced a violent scramble that frustrated even that Christian response. Nor did he find solace in the European community. Captains and supercargoes were a coarse lot, but they were no more distastefull than the English nabobs and their American imitators. With ingratitude and pretension abounding, moral rectitude apparently wanting, and charity proving actually dangerous, there was little in Canton to curb Forbes's cynicism or reinforce the pastoral ideals of a boy from Round Hill School. His fragile grasp of religion failed him, and he confessed to his wife that "theres [sic] not much hope of my reforming-for I am sure there is misanthropy and hard heartedness in the very atmosphere of this place." Physical decay haunted Forbes, and the slow death of his dear friend and kinsman, Handasyd Cabot, left him broken with fear and depression. Yet even while innocence and virtue were struck down in this world, Forbes maintained a strong face and hospitable temper. In the midst of his own trials he instructed his wife to be polite to all who claimed to know him at Canton, as it was "only a forcible example of the near connection between duty and self-interest."[24] Despairing of enjoyment of either the climate or society in the foreign quarter, Forbes turned to business for his hope and his reward. Fortunately there was usually much to occupy him. With the uncertainties of communication and the high risks of transportation halfway around the world, as well as delicate relations with the imperial authorities to contend with, a successful China merchant had to be shrewd and decisive. If the commission house provided more rational and flexible business structures than the old East India Company, the system still rested on the good name of the resident partners. Caught between the old kinship methods of trade and truly modern bureaucratic commerce, the resident merchant in the early 1830s had to adopt more efficient, standardized methods while maintaining the tangle of personal alliances at the core of the house business. A merchant's reputation in the free trade system depended on fair and equitable service to all his customers, while his reputation as a gentleman required "doing the right thing" for his friends. Forbes took up the role of resident partner in Russell & Co. just months after the British Parliament had repealed the East India Company's monopoly. Suddenly thrown open to free trade, Canton was swarming with British interlopers and profiteers who pressed the established American houses much the way Perkins & Co. had previously threatened the East India Company. As early as February 1834, Howqua was begging Forbes (still in Boston) and Cushing (in London) to ship only silver because "we shall be overwhelmed with British goods of every description on the opening of trade." By the time Forbes arrived in Canton that autumn, matters had taken just such a turn. There were too many vessels in China. British goods were a drug on the market, and the newcomers had bid the price of teas out of reach. Forbes reported to Cushing, "I believe that we must make up our minds that the China Trade is not subject to the rules of commerce elsewhere & that no calculation can be made in it; people seem to be launching into it almost as freely as ever." Even the old seasonal regularity that followed the monsoons was lost in the new competition: By 1836 "the good old times" were gone and American ships were loading all through the summer.[25] With business in chaos, only some careful reforms could save Russell & Co. Even before the flood of new competition the house had suffered from informality and poor organization. Partners and clerks shared menial tasks indiscriminately, and their correspondence mixed business information with personal family matters. These habits had suited an aggressive new firm breaking into the market, but now the increased volume of trade exhausted everyone and resulted in numerous errors and lost business. John C. Green, a New York merchant who became a lifelong supporter of Forbes's enterprises, was sent out to reorganize the house at the new term in 1834. Green's arrival brought in new clients, while the rapid promotion of young Forbes helped stop the drift of Boston business to other American houses in the Far East.[26] As the onslaught of free trade overwhelmed the Canton factories, the new partners bent with a will to the task of reforming Russell & Co.'s operations and securing its position in the American China trade. REFORM AND COMPETITION One of the inherent difficulties of the China trade had been communications, and now more than ever improvements were needed. Letters were commonly five or six months out-of-date when they arrived in China. Even then, the captain or supercargo often withheld the ship's letterbag until the cargo was sold and a return was secured. This sometimes meant another three months' delay, a particular hardship on the resident merchants because family news was sequestered along with business. The severe demand for fresh information naturally gave rise to all kinds of skulduggery. Ships' officers enhanced their purses by selling early deliveries, sometimes jeopardizing their employer's interest.[27] Forbes's first response to this villainous system was to exploit its weakness in his own favor. He explained the system to Baring Brothers of London; they should send duplicates of their letters with their own captains, "with orders to dispatch them to Canton by the first Boat that boards," and to await further orders before delivering the regular mail sacks. This arrangement didn't solve the problem, however, because native scoundrels on a Chinese boat might sell the letters-and Europeans almost surely would. A year later Forbes was still complaining about captains and couriers who served the highest bidder.[28] The first positive alternative to holding back the news was the advent, in 1835, of the London overland mail. This was still largely a water route, but it crossed overland at Suez rather than sailing the long way around the Horn. Forbes was intrigued with the prospect of faster, more regular communication with London and Boston and urged his brother Bennet to experiment with the new route: I call your attention to this mode of sending letters as one which may often bring us late accounts from you, and I wish you to write me a business letter quoting prices prospects ships coming & all other matters that may be interesting to the House by the 8th packet of every month except April June & July when ships are coming direct[;] it will then reach London by the 1st & come on overland[;] postage must be paid in London about $3 for single letters (I believe[)] Send a duplicate of your letter with your next overland despatch and a triplicate to be sent by ship from England in this way if you pursue the plan systematically the experiment may be fairly tried in a year.[29] While the overland system did quicken the pace slightly, especially in the off-season for American vessels, it could not fully remove the news delay, and China merchants continued to rely on their gambler's instinct. So deeply was the communications problem ingrained in the business that when, in the 1860s, the electric telegraph finally broke the time barrier with near-instant information, the old-fashioned China merchant ceased to exist.[30] Because they frequently operated in the dark, men like Forbes relied on a network of commission merchants around the world whose integrity they trusted. The character of these brokers was of primary importance. Each must be trusted to accept a consignment of goods, often without warning, and then sell them, hold them, or reship them elsewhere, depending on his judgment of the local markets. The proceeds, less commissions and charges, had to be remitted in cash or goods of sufficient value in the consignor's home market. Significant losses resulted even from selecting the wrong form of money for a cash remittance! Young Forbes filled copybooks with letters to agents in Europe, throughout Asia and in America, either announcing the impending arrival of fifty or one hundred thousand dollars worth of goods to their care, or asking them to buy a like amount and bill him for it. The web of credit and tangle of bills that accompanied the merchandise worked as long as endorsements were honored; a good name in this business was essential.[31] When Forbes took up his partnership in 1834 he sent his business connections a specimen of his "Russell & Co." signature and outlined the principles on which he identified with the house. Russell & Co. had a long record of paying "promptly & in cash." Its agents had "acquired a standing with the Chinese" that would "generally enable them to have the choice of the Teas in Market," and they were now staffed adequately to handle the volume of business at low and fixed rates of commission. It was becoming a point of honor with Forbes that Russell & Co. should not speculate in ventures on the house account. The company's whole capital was employed in carrying out the business of its clients; no conflict of interest should arise. Forbes condemned speculations in short-term investments with a client's unclaimed funds. The practice not only risked the unnecessary loss of other people's money, it was generally carried on by ratecutting houses who did the, commission business "for nothing for the sake of getting large funds to pass through their hands." Forbes thought Russell & Co. should be judged on economy, efficiency, and quality of service as a conservative, dependable agency. He was not prepared to answer for the occasional windfalls of reckless gamblers.[32] Facing the ruinous pressures of cutthroat competition in the mid- 1830s, Forbes and John C. Green advertised their new policy of uniform charges and tried to implement protective rate agreements among the other established houses. Explaining this policy to John Cushing, Forbes wrote: "We wish to have our charges uniform & consider it only fair to treat all alike; we have made a bargain with Wetmore [a New York-based China house] never in future to do business for less than our usual rates & I believe no other houses here charge less or so little. "[33] Not everyone shared Forbes's enthusiasm for this new kind of equality. The new agreements meant raising the commissions of those who had financed Forbes's return to China on the ship Logan. Cushing apparently let the matter pass, but William Sturgis exploded. He accused Forbes of profiteering on old family connections and transferred his business to the Wetmore house, which promptly took him in at the old rate. The encounter left Forbes hurt, angry, and in serious trouble with family and friends in Boston. Because of the sixmonth delay as letters traveled around the globe, it took until August of 1836 for Forbes and Sturgis to reach an understanding. Collusive rate agreemen ts broke down quickly in Canton, but Forbes stuck doggedly to the principle of equal charges and gradually won back the confidence of his friends.[34] As ruthless competition cut margins to the bone, merchants like Forbes relied increasingly on discretionary judgments to rescue their clients' ventures. This method carried its own risk. Because a commission merchant did not share in the outcome of his transactions, as had the old supercargo, he was supposed to be a neutral agent. Still, imperfect knowledge on the part of the principals forced them to grant broad discretionary powers to their hired agents. This meant the agent had to make entrepreneurial decisions while the owner remained free to quarrel if things turned out badly. Forbes was usually given price limits by his clients, but he was expected to violate orders as his immediate knowledge of the market dictated. When he did so and failed, his client was disgruntled. Yet when he followed instructions and failed, his client was furious! The dilemma bothered Forbes most during his first year back in China. He was still only twenty-one years old, and he frequently wrote to the older partners at Bryant, Sturgis & Co. for approval and more specific instructions. As he acquired experience and confidence, however, his discomfort disappeared. A "merchant in a liberal sense" learned to ignore the abuse and to stand on his actions boldly.[35] Forbes was making a great deal of money and learning valuable lessons in Canton, yet by 1836 he was personally troubled once more. He asked his brother Bennet to withdraw his homebound funds from trade and to close out any joint ventures that might be pending. By March 1836, he feared that his connections in Canton were becoming so uncertain that he asked Samuel Cabot in Boston for a job at home, even though he had assured Cushing just a week earlier that prospects for Russell & Co. were very good indeed.[36] At the root of Forbes's new personal crisis was the question that his brother Tom had not lived to answer: Should he seek his fortune in China or at home? He wrote darkly now of a "path of duty," trying once again to explain his decision to stay in Canton. Nothing but a "positive obligation" prevented him from sailing at once, but he never made clear whether his debt was to Cushing, Tom Forbes and the past, or his wife and mother and their future "independence." Money alone could not hold him: "It would go hard," he confessed, "if I could not make a living at home and perhaps it was my mistake in not seeing this plainly two years since." He admitted that in staying he had acted "upon a theory regarding 'happiness'," and now he mourned the "loss of friends[,] the years of youth & probably of happiness which I threw away in Exchange for a doubtful good money." Nevertheless, he proposed to stay until the end of the season, when he could arrange to leave "with perfect confidence" and also be assured of "some occupation at home."[37] In fact, Forbes was completing a plan whereby he could end his exile in China and still keep Russell & Co. as the focus of his future career. The immediate concern was for John C. Green to anchor Russell & Co. by staying in China until a suitable person could be groomed to fill his place. Forbes was convinced that the China trade was best tended by men of like mind and like family, gentlemen brought up to trade and bound by a close mercantile community back home. He hoped to combine the values of that old mercantile system with more modern ideas of long-run interest and managerial oversight. Properly guided from a distance, Russell & Co. might continue to provide him with a moderate income for administrative services. It could offer a perfect opportunity for Forbes to place picked men whose fortunes and allegiance he might continue to command, and it would keep him in close touch with the great commercial capitalists of the world. Houses like Russell & Co. were originally outposts of the home firm. By reversing that relationship, Forbes was determined to make himself the Boston agent of the Canton firm, "to be on the spot with the last and best information on all subjects connected with China."[38] Why was the young man who hated China determined to build his fortune around it? The answer lies in the one positive image he found in Canton-the great Hong merchant Howqua. Thin, frail, marked in his visage by a wisp of beard and that exquisite pride of Oriental leisure, Howqua impressed the athletic American with his delicate strength. Like most Westerners, Forbes never understood the Confucian doctrines of collective responsibility and right conduct that governed Chinese lives. What he did see was the immense fortune and power that Howqua possessed and the code of honor that governed the use of both. He found something captivating in a man who had "certain control over foreign trade," who could "lord it over the other 10 Hongs," while remaining humble and generous and maintaining "all the members of his family, including near and far cousins, in a certain style," according to Chinese custom.[39] Forbes's own preoccupation was not with wealth itself, but with the prospect of independence and a surplus to share with those he loved. A single fortune was easily lost; what he needed was a structured system for making money, the fruits of which he could direct into the hands of deserving friends and relatives. To Forbes's eye, jaded by the surrounding images of greed and poverty, Howqua appeared as a model entrepreneur-driven by duty, not avarice, and enjoying great power closely checked by an equal and intimate sense of responsibility. Forbes knew that Russell & Co. was no place to spend his life, but perhaps it was the foundation on which to build this larger dream. --[cont]-- Aloha, He'Ping, Om, Shalom, Salaam. Em Hotep, Peace Be, All My Relations, Omnia Bona Bonis, Adieu, Adios, Aloha. Amen. Roads End DECLARATION & DISCLAIMER ========== CTRL is a discussion and informational exchange list. Proselyzting propagandic screeds are not allowed. Substance—not soapboxing! These are sordid matters and 'conspiracy theory', with its many half-truths, misdirections and outright frauds is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. 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