15 May 2022

Origins of the Santa Fe Railroad

From From the River to the Sea: The Untold Story of the Railroad War That Made the West, by John Sedgwick (Avid Reader / Simon & Schuster, 2021), Kindle pp. 83-85:

It no longer needed a visionary. It needed moneymen from the great capital centers of Philadelphia, New York, and Boston.

Of the three, Boston was the most railroad minded. It had been the nation’s first major hub, with any number of lines running in and out of the city. For a small city on a stub of a peninsula, Boston was surprisingly worldly. The first great Boston fortunes were made in the China trade, then amplified by investments in the textile mills of early industrialization, only to be compounded by provident marriages to the daughters of other wealthy Bostonians. The investors were referred to as the Boston Crowd because of this interbreeding. They were mostly drawn from that class of Bostonians—Brahmins was the derisive term—whose members were, in the main, Harvard-educated Episcopalians, with the occasional Unitarian thrown in, who lived for their clubs and thought of themselves as existing on a social plane only slightly down from God. They were like honeybees in a hive—industrious but interchangeable.

From this esteemed collective about the only one to emerge with a distinctive personality was Thomas Jefferson Coolidge—and he on the strength of a surprisingly frolicsome memoir he had privately printed, the copies limited to just forty-eight—who served as the Santa Fe president for a year starting in 1880. Coolidge took his middle name from the American president, his great-grandfather on his mother’s side, but his lineage could be traced back to a Coolidge who settled in Watertown, just downriver from Boston proper, in 1630.

Coolidge grew up in Canton, China, where his father was a partner in a Boston trading firm that dealt tea and opium in the China Trade. After Harvard, he married the daughter of William Appleton, clipper ship owner, European trader, president of Boston’s Second National Bank, congressman, president of the Massachusetts Hospital, and one of the richest men in the city.

Coolidge served as the ambassador to France, and on any number of important national commissions, but he prized above all else his membership in The Friday Club, which, he noted, had once blackballed the eminent Dr. Oliver Wendell Holmes, father of the Supreme Court Justice, for fear he would dominate the conversation. His memoir is rich in frivolity—meeting the actress Fanny Kemble at a monastery in the Alps, touring the Caribbean aboard his eighty-foot yacht, riding a donkey to the temple of Ramses in Egypt.

In recounting his life, Coolidge mentioned his yearlong presidency of the Santa Fe railroad only in passing. In October of 1878, he wrote, he took his son and namesake for an extensive tour of the West that covered almost ten thousand miles, particularly enjoying the Colorado portion aboard the Santa Fe Railroad with one William Barstow Strong. Coolidge did not mention that he was a director of the company at the time. When he returned to the West two years later, he noted that he again boarded a Santa Fe train, but this time stepped off at Topeka, where “I was elected president of the Atchison Railroad at the annual meeting.”

Six sentences later, he was done with it. “I resigned as soon as I could,” he wrote. “I think in about a year and a half.” He failed to mention that on assuming the presidency, he had purchased $700,000 worth of the company. The point being, he presided over the Santa Fe only as an investor. The moment the investment seemed unpromising, he sold it and got out.

None of the Boston Crowd served as presidents for more than a few years. But this was the way of the modern corporation as they came to define it. They were not managers, but investors, and that inclined them toward caution in a business that demanded daring.

13 May 2022

Railroad Boom and Panic, 1870s

From From the River to the Sea: The Untold Story of the Railroad War That Made the West, by John Sedgwick (Avid Reader / Simon & Schuster, 2021), Kindle pp. 66-68:

The western trains didn’t just build America out. They built it up, raising America into the industrial colossus that was well on its way to succeeding the British empire as the mightiest in the world. By 1873, the railroads had succeeded farms to become the nation’s largest employer, the repository of most of its capital investment, the near-total basis of the stock market, and the creators of the most spectacular private fortunes the world had ever seen. The nation’s preeminent railroad man, Cornelius Vanderbilt of the New York Central and other railroad holdings, was well on his way to accumulating a fortune of $100 million, requiring a new word, tycoon, to describe someone so unimaginably rich. Many more tycoons would follow.

The speed of the transformation was simply staggering. The Northern money that had previously been bankrolling the Civil War shifted to building trains. By 1873, the total railroad investment had tripled after the close of the war to $3.7 billion, taking the total number of train companies operating in the US to an astounding 364. They pulled the entire economy along with them, raising the number of businesses in America by 50 percent in one year, 1870, alone.

No one demonstrated this shift—and its hazards—more than the financier Jay Cooke. He had been a major player in financing the war effort, dispatching thousands of salesmen into the northern countryside to sell $1 billion in war bonds to villagers who wanted to do their bit. Now that the war was over, Cooke switched to selling Northern Pacific railroad bonds on a similar basis, creating a bank in Philadelphia as his repository. The Northern Pacific had been created by Congress as a second Union Pacific—a private corporation relying on federal funding—but it suffered from the same flaw, much magnified. If there had been little immediate market for the lands of the Union Pacific, there was even less for the lands of the Northern Pacific that ran farther up along the chilly outback of the north. Tracklaying went so slowly, and the returns were so meager, that the company was still a thousand miles short of completion when the Crédit Mobilier scandal broke in 1873, exposing the Northern Pacific’s massive vulnerabilities.

Alarmed, the partner who ran Cooke’s New York City branch frantically shifted his holdings to his wife’s name to preserve his fortune, then shuttered the bank to keep other Northern Pacific investors from retrieving their funds. Cooke then closed the main Philadelphia branch, causing the big bag of air that was the Northern Pacific to suddenly burst. “If I had been struck on the head with a hammer, I could have not been more stunned,” said one Northern Pacific executive. The Cooke bank’s collapse sparked a run on banks throughout the East, driving forty of them into bankruptcy, and shaking financial institutions everywhere. The president of the Bank of California killed himself when his bank collapsed. Five thousand businesses went under, taking $250 million in debts with them, dragging down lenders and driving up national unemployment to fourteen percent. A “mad terror” so convulsed the stock market, it had to close for ten days. Western Union stock dropped by half, railroads as a class by a third. A quarter of them, eighty-nine in all, went out of business.

In the past, there had been regular economic “panics”—the word for financial disruption—but they had been relatively brief. This one, the Panic of 1873, extended all the way through 1879. For its length, severity and sweep, it would rival the Great Depression as the greatest financial catastrophe in American history. This was the downside of the spectacular railroad boom: while both the railroads and the country grew together, they shrank together, too. Duluth, Wisconsin, had largely been created by the Northern Pacific, and when the railroad went into bankruptcy, Duluth became a ghost town, its population plunging from five thousand to thirteen hundred as refugees left to hunt for work elsewhere. The ruin stoked fury all along the railroad routes, culminating in the biggest job action in American history, the Great Railroad Strike of 1877, when eighty thousand railroad employees went out across the country, and a half million other workers followed in sympathy. In Pittsburgh, Pennsylvania Railroad strikers set fire to the roundhouse, igniting the train station and starting a conflagration that burned down three square miles of the city.

12 May 2022

Origins of the Union Pacific Railroad

From From the River to the Sea: The Untold Story of the Railroad War That Made the West, by John Sedgwick (Avid Reader / Simon & Schuster, 2021), Kindle pp. 35-37, 47:

The first train to venture into the uncharted West was the Union Pacific, a new railroad company that had been created by Congress solely for the purpose. Extending out from the Midwest, the UP had linked up with another federal creation, the Central Pacific, coming in from California. Together, they created that first transcontinental, the Pacific Railway. May 10, 1869, was a glorious day for the young country, as it marked the occasion when the two lines met at Promontory Point in the Mormon country north of Salt Lake City. It was a fantastic engineering achievement and a triumph of heroic perseverance, especially by the track layers, mostly Irish going west, mostly Chinese coming east, who engaged in a spirited competition to outdo the other. (That honor fell to the Chinese.) But when judged purely on commercial terms, the line was a dismal failure. It was the moonshot of the railroad era, an accomplishment that was only symbolically significant. It was all too telling that when Leland Stanford, one of the four powerful money men behind the Central Pacific, tried to slam home the Golden Spike with a monstrous hammer, he missed it entirely. This was especially embarrassing since the blow was to complete an electric circuit that would automatically send the thrilling news out over the telegraph wires that accompanied the tracks. A telegraph operator had to key in the word that flew around the world—“DONE!”—setting off a chorus of bell-ringing all across the country, led by Philadelphia’s cracked Liberty Bell. In San Francisco two hundred and twenty cannons boomed forth; Washington, D.C., fired a hundred more. Chicago greeted the news with the biggest parade of the century. And so it went, total jubilation all around the country. It was as if these intrepid Americans had discovered a new continent, come up with a spectacular invention, or won a world war. And, indeed, they had done all of these. What they had not done was find a sound business rationale for the endeavor.

A railroad to the Pacific had first been proposed by a New York merchant, Asa Whitney, back in 1844, and was long championed by the visionary engineer Theodore Judah. But it was the former railroad lawyer Abraham Lincoln who pushed the initiative through as president in the war year of 1862. Lincoln had also set the width of track for the railroad, establishing the peculiar distance of four feet eight and a half inches as the national standard for a train system.

[Endnote:] Previously, American trains ran on a maddening hodgepodge of track widths. When Lincoln went by train from Springfield, Illinois, to New York City to receive the Republican presidential nomination for president in 1860, his trip took four days because of all the delays in transferring to trains on five different widths of track. If he had ridden a single width of track, the trip would likely have taken one.

10 May 2022

Nationalizing the Opium Trade

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 446-447:

With the advent of a free, legal, and open Asian commerce in opium, the native merchants of India and China moved to dominate the trade, squeezing out the Europeans who had acted as go-betweens in the past. By the 1870s, the India-China opium trade was so firmly locked up in the hands of native traders on both sides that there was no longer much money to be made by the Western firms that had pioneered the “country” trade in the early part of the century. In the face of declining profits, Jardine, Matheson & Co. (now run by a slew of nephews and other descendants of the founders and their partners) pulled almost entirely out of the opium trade in 1873, joined by other large Western firms. Domestic production in China, meanwhile, kept rising—ultimately to such stupendous heights that it would dwarf the continued imports of the drug from India. The dawn of the twentieth century would find China producing ten times as much opium internally as it imported from abroad, an explosive abundance of cheap domestic narcotics that would create a public health emergency worlds beyond even the most exaggerated estimates of what had existed in the 1830s prior to the Opium War. So much for the virtues of legalization.

In spite of the best efforts of moral activists at home, the British government would ultimately do nothing to scale back the dependence of British India on opium revenues or otherwise try to help prevent the growth of the drug’s use in China. Meanwhile, the Qing dynasty would continue in its failure to suppress or even regulate the use of opium by the general public in China, wallowing in a quagmire of official corruption it could not escape. Up to the twentieth century, though, Britain’s role in that process would be dwelled upon more by westerners than by the Chinese. It was the English-speaking world that condemned it as “the Opium War” from the beginning, while Chinese writers through the nineteenth century, including Wei Yuan, simply referred to it as a border dispute or foreign incident. To them, opium was a domestic problem and the war was a minor affair in the grand scheme of China’s military history. Only after the fall of the Qing dynasty in 1912 did historians in China begin to call this war “the Opium War” in Chinese, and only in the 1920s would republican propagandists finally transform it into its current incarnation as the bedrock of Chinese nationalism—the war in which the British forced opium down China’s throat, the shattering start to China’s century of victimhood, the fuel of vengeance for building a new Chinese future in the face of Western imperialism, Year Zero of the modern age.

08 May 2022

Opium-funded Philanthropy in India

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 432-433:

Funneling the vast fortune from his China trade back into real estate in Scotland, Matheson would die the second-largest landowner in the entire United Kingdom.

Neither James Matheson nor William Jardine went in for significant philanthropy as John Murray Forbes’s uncle Thomas Handasyd Perkins had done in Boston, but a loftier place in public memory was reserved for Jamsetjee Jeejeebhoy, Jardine’s longtime associate in Bombay. With a fortune made by dominating the opium and cotton export trade of western India, Jeejeebhoy poured his own money locally into Parsi charities, famine relief, schools, hospitals, and public works, establishing himself as one of the leading figures (the leading figure, by some fawning accounts) who turned Bombay from a colonial backwater into a modern global metropolis. A director of banks and newspapers along with managing his business empire and funding many charitable works, Jeejeebhoy was a steadfast supporter of British rule, and on February 14, 1842, just as the war in China was nearing its end, Queen Victoria knighted him. “I feel a high, I hope a justifiable pride,” he said at the time, “in the distinction of being enrolled in the knighthood of England, marked as that order has ever been by the brightest traits of loyalty and honor.”

Jeejeebhoy was the first Indian to become a British knight, and in 1857, Victoria would make him a baronet as well. The name of “Sir J. J.,” as he is known colloquially, adorns schools and hospitals in Bombay to this day, the great philanthropist of the city’s Victorian past. As one Gujarati newspaper rhapsodized at the time of his death in 1859, “His hospitals, rest houses, water works, causeways, bridges, the numerous religious and educational institutions and endowments will point to posterity the man whom Providence selected for the dispensation of substantial good to a large portion of the human race.” Of the fact that so much of that “substantial good,” dispensed to such a “large portion of the human race,” was made possible by Jeejeebhoy’s sale, through Jardine and Matheson, of Indian opium to Chinese smugglers, little is said.

06 May 2022

Parliament Debates the Opium War

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 405-407:

The motion finally came to a vote at four o’clock in the morning of April 10 [1840] after three grueling nights of debate. Five hundred and thirty-three weary parliamentarians filed out into the division lobbies, and when their votes were tallied, it turned out that Palmerston had prevailed by the slimmest of margins. A majority of just nine votes—271 to 262—allowed Melbourne’s government to escape censure and effectively gave Palmerston’s war in China a sanction to proceed as planned. The outcome was so close that if the very cabinet ministers whose conduct was on trial had not been permitted to vote in their own favor, the motion to condemn them would have passed. For that reason it had been said that if the majority were fewer than ten votes, Palmerston and the other ministers would still agree to resign. It was, but they did not.

It is impossible to measure exactly how much influence George Staunton had on that outcome, but at least seven or eight of the Whig lawmakers had openly expressed their willingness to defy their party and oppose the China war if the debate should convince them it was morally unjust. If Staunton had declined to support Palmerston, or even had spoken against him, it would have taken just five of those waverers to change their votes and the entire outcome would have been reversed. James Graham’s resolution of censure would have passed, Melbourne’s government would have been brought down, and the Opium War might have been prevented.

An angry opposition press hunted for parties to blame. Some faulted Graham for couching his resolution in such political language of “negligence” rather than targeting the war head-on: if the Conservatives had “proposed to stop the war at all events, and to prevent every infraction of the laws of China with respect to opium—so surely would Parliament have gone along with them, in censuring the conduct of the Ministers,” said the Spectator. Another paper observed that though the ministry survived the vote of censure (barely), nevertheless “they are condemned by two hundred and sixty-two of the people’s representatives, and by the nation at large the principle of the war is all but universally condemned.” A majority of just nine votes out of more than five hundred “would have been fatal to the existence of any preceding Administration,” said one critic, “and it argues a contempt of the opinion of Parliament, and a degree of assurance never equalled, to persevere in plunging the country into war on the strength of such a vote.”

Any lingering hopes that the closeness of the vote in the House of Commons might still derail the war were destroyed a month later with the failure in the House of Lords of a much more explicit motion to blame the crisis on British opium traders. Palmerston’s Conservative antagonists had a clear majority in the upper house, and the motion was expected to pass until the elderly Duke of Wellington—the general who had defeated Napoleon at Waterloo, Britain’s greatest living military hero, a former prime minister, and a Conservative—broke with his party to deliver an adamantly pro-Palmerston speech that silenced the motion’s supporters and sent it to a quick death.

Wellington said he had looked into the cause of the war and was positive that “it could not be opium.” The lanky, seventy-one-year-old “Iron Duke” argued that it was entirely about the protection of British lives in the far corners of the world, an unquestionably fair use of military power. The dispatch of a naval fleet was the only fitting and just response, he believed, to the rash and violent actions of Lin Zexu against Elliot and the British merchants.

03 May 2022

China's Silver Shortage, 1830s

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 304-307:

There was nothing the government could do about the weather, but the root cause of the economic turmoil in the 1830s, and the problem from which many of the others grew, was a human one: China’s monetary system had gone haywire. It was mainly a problem of currency, of which the Qing dynasty had two primary forms: copper for small transactions and silver for large ones. Copper came in minted coins (with holes through the middle so they could be strung on a loop for convenience), while domestic silver—nearly pure and known in English as “sycee”—was unminted, traded by weight in units of measurement called taels that were just under an ounce. In normal times, a tael of silver was worth a thousand copper coins, and, value for value, the excessive difficulty of moving large amounts of copper between provinces meant that silver was the medium through which all long-distance trade was conducted within the empire. Silver was also, significantly, the basis on which tax quotas were assessed. By contrast, copper was the medium of the rural marketplace and menial wages. Nearly all of the income and savings of the lower classes of China—farmers, hired laborers, craftspeople—were in copper coins.

The crisis was that the value of silver had begun to rise sharply, and as it rose the exchange rate between silver and copper skewed out of control. From the ideal rate of 1,000 copper coins per tael of silver in the eighteenth century (even less at times, which was a boon for peasants since it meant their copper money was worth more), it had risen to 1,200 by the time Daoguang came to the throne. By 1830 it reached 1,365 copper coins per tael of silver and showed no signs of stopping. Since taxes were assessed in a fixed amount of silver, which had to be purchased with copper currency, this meant that by the early 1830s the peasants of China had suffered a nearly 40 percent increase in their effective tax burdens for reasons none fully understood. And as with nearly every problem in the empire, the corruption of officials made a bad situation even worse, as tax collectors commonly charged even higher rates of exchange so they could pocket the proceeds. By the late 1830s, some regions were reporting copper–silver exchange rates as high as 1,600 to 1, with tax collectors independently demanding as much as 2,000 copper coins per tael of silver owed. This dramatic decline in the worth of copper currency was disastrous for the general population, piling economic hardship on the poor who could scarcely bear it and sparking widespread tax protests that layered on top of all the other sources of dissent against the government. But although the emperor could occasionally grant tax amnesties to regions afflicted by floods or drought, the government quite desperately needed every tael of revenue it could get and so the exactions continued.

...

Even with that outflow of sycee silver, however, the inflow of Spanish dollars to purchase tea and silk at Canton should have been able to maintain a relatively steady overall silver supply in China (and in fact, since the late eighteenth century Spanish dollars had been preferred even over native sycee in some of China’s most important domestic markets). But on that count, a range of forces far beyond China’s borders came into play. First, it had been American merchants who brought most of the silver to China in the early nineteenth century (fully one-third of Mexico’s entire silver output between 1805 and 1834 was carried to China by Americans). But a shift in U.S. government monetary policy in 1834 made silver more expensive for American merchants, so they switched abruptly to using bills of exchange—which were acceptable to the Hong merchants but resulted in a decline in the amount of tangible silver entering the country from abroad. With the drop in American imports, China, which for centuries had been the world’s largest net importer of silver, unexpectedly turned into an exporter of the metal.

In the even bigger picture, though, what the Chinese scholars who blamed foreign trade and opium for the scarcity of silver in China did not realize was that it wasn’t just a Chinese problem: by the 1820s, silver was becoming scarce everywhere. Most of the world’s supply at this time had come from mines in Spanish Mexico and Peru (thus the importance of the Spanish dollar), but national revolutions in Latin America that began in the 1810s shut down those mines and choked off the world’s largest fonts of the precious metal. Global production of silver declined by nearly half during the 1810s—the same time its value began to creep upward in China—and it continued to decline during the decade that followed. The ramping up of the opium trade in 1820s China thus coincided fatefully with the onset of a global slump in silver output that would last for the next thirty years.

Regardless of where the specific blame lay, it was a devastating confluence of economic forces for China: the loss of sycee through the opium smuggling trade, the global scarcity of silver after the Latin American revolutions, and the drying up of American silver imports into China together helped cause a catastrophic decline in the empire’s supply of the metal. And it was a vicious cycle, for as silver became more valuable in China, wealthy families and businessmen would hoard it, removing even more from circulation and making the problem worse.

01 May 2022

China's Decline Under Daoguang

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 302-304:

Conditions in China were getting worse under Daoguang’s reign. By the time he took the throne, and to some degree beginning even with his father, Jiaqing, it becomes easier to speak of the empire each sovereign inherited rather than what he created or built. They, and the emperors and regents to follow, would have their successes—the dynasty would, after all, survive into the early twentieth century—but rarely did they leave China in a more solid position than they had found it. By the early nineteenth century, an inexorable process of decline was setting in, the slow setting of a sun that had reached its zenith under Qianlong in the late 1700s. Jiaqing had done his best, making strong efforts to rein in the corruption of the military and suppress the White Lotus and other rebellions. But under the rule of his son Daoguang, new problems would plague the empire even as old ones kept coming back in different forms.

Patronage, bribery, and embezzlement were the accepted norm among civil officials, especially in the lower orders. Population pressures on the land continued unabated, and Han Chinese settlers seeking an escape from the crowding continued to move into mountainous regions of the empire that had long been home to indigenous peoples, sparking incidents of ethnic violence. A breakdown of trust between the government and peasants worsened. The military was weakened by Jiaqing’s cost-cutting measures after the White Lotus campaigns. Through the 1830s, internal rebellions erupted in different parts of the empire with regularity, every year or two—some led by religious sects similar to the White Lotus, others by rebel factions bonded together by regional or ethnic ties. The many divisions that ran naturally through a vast and diverse multiethnic empire were turning more frequently and more visibly into fractures.

Opium wove its way right through the tattering fabric of this restive society, the single most visible symbol of the Chinese government’s inability to control its people. In spite of Daoguang’s strong desire to control the drug, coastal enforcements on smuggling had failed so completely that by the later 1830s when a foreign ship materialized near the coast it would find not naval patrols but thousands of buyers standing along the shore and whistling to it in hopes that it would drop anchor and sell to them. A major north–south land transport route for opium through Hunan province formed the locus of a series of uprisings that took place in central China in 1836, and imperial troops transferred inland to pacify them turned out to be such heavy users of opium themselves that they could barely fight. Ironically, they had acquired their drug habits in the course of their previous mission, which was to police the smugglers on the coast near Canton.

China’s rising domestic unrest caught the attention of foreigners in Canton, who worried about damage to tea and silk production from the disturbances in the interior. However, some of them also sensed opportunity in the ones that took place on China’s periphery. In 1833, an explosive revolt of aborigines on Taiwan threatened Qing imperial control of the island for several months, in the midst of which it was announced in Britain’s parliament that Taiwan had “declared its independence of the Chinese.” Some foreigners had already begun touting Taiwan as a potential British colony, a base from which they could conduct their trade with China free from the restrictions of Canton. They argued that, morally speaking, to take control of Taiwan would be nothing like trying to seize territory on the Chinese mainland, because Taiwan had been a Dutch possession prior to its conquest by Qianlong’s grandfather Kangxi, so they judged it to be merely a colony of the Qing Empire rather than essential Chinese territory. According to one Canton English-language newspaper, the Taiwanese were a conquered people, “vassals of China; not willingly, but in consequence of bloody wars,” and so even foreigners who opposed aggression toward China shouldn’t object to the British taking control of the island, which the paper judged would be praiseworthy even if only for the sake of “ridding its people of the tyranny of the Chinese.”

24 April 2022

Opium Culture in Qing China

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 225-229:

It is unclear how many Chinese smokers of opium in the early nineteenth century were what we might call addicts. Some certainly were, but given how much was being imported they could not have been many relative to the size of the empire. By the start of Daoguang’s reign in 1820, the nearly five thousand chests being imported from India each year were enough to support about forty thousand average habitual users empire-wide, or as many as one hundred thousand of the lightest daily smokers, so at most a few hundredths of a percent of the population. Furthermore, most users at this time seem not to have been terribly debilitated by opium—they led productive lives and were not outcasts from their families or professions. Indeed, opium smoking was a generally open, public act and there were many socially encouraged reasons to take part in it. Medicinal reasons aside—and there were dozens of those—businessmen smoked opium to focus their minds and help them make smarter deals (at least they imagined that was the effect). Students smoked it for the clarity it brought, thinking it would help them succeed on the civil service examinations. For the stylish it was a relaxant to be offered to guests after dinner. For the privileged with little to do, like the eunuchs of the Forbidden City or Manchu courtiers with few responsibilities, it was an escape from boredom.

Opium was, in other words, perfectly acceptable in respected circles. An aesthetic culture of gorgeously wrought pipes and other accessories grew up around its use by the wealthy, the very expense and extravagance of those tools elevating the act of smoking itself. The Chinese fashion for smoking, moreover, was quite profligate in comparison to the eating of the drug that went on in Britain; much was wasted in the process, and a smoker could easily go through an amount of opium in one day that would kill someone who ingested it directly. For those in more humble situations who couldn’t afford to smoke it themselves, employment in the opium trade still provided a chance for income as couriers and petty dealers.

From a purely economic standpoint opium had its advantages. Valuable and easy to carry (it was worth more than three hundred times its weight in rice), foreign opium was a very good business proposition for Chinese merchants in Canton. Being illegal, it could be turned around quickly for a profit in silver—within a few days in most cases, as compared to tea, which involved large cultivation and transportation networks, and generally took half a year or more to produce a return on each year’s investment. Since the Canton traders made more back from their customers inside China than they paid to the foreign suppliers, trading in opium also served as a convenient way for them to increase their own silver stocks, which they could then use to procure tea for sale to the foreigners. And though they had to pay bribes to officials, the illegal trade was otherwise, de facto, free from taxes.

There is no evidence that the moral exhortations of the Daoguang emperor caught on with the general public in any meaningful way. The widespread public opposition to opium on moral and public health grounds for which China would be known in the twentieth century was at this time entirely absent. Though perhaps the public’s resistance to imperial moralizing was only to be expected; in the early seventeenth century, the Ming dynasty had tried to suppress tobacco for reasons very similar to the Qing dynasty’s ban on opium—even to the point of ordering execution for anyone who cultivated or sold it—but they did not succeed. By the time of the Qing dynasty, those prohibitions were long forgotten and tobacco was an accepted staple of daily life in China. There was no reason the Jiaqing or Daoguang emperors’ edicts against opium should have been more likely to find success.

The Chinese of the early nineteenth century are often described as being uniformly insular and scornful of anything foreign, thanks mainly to an overly literal reading of the boilerplate language in Qianlong’s edict to George III where he claimed that he did not value foreign things. But this was not really the case. For wealthy urbanites in China, Western goods were all the rage by the 1820s—furs, glass, intricate clocks, cotton textiles, and other products of the Canton import trade, which were highly sought after by those with sufficient money to buy them. Far from encountering any kind of disdain for foreign objects, Chinese retailers in the early nineteenth century found that attaching the adjective “Western” to their merchandise was in fact the key to a higher selling price.

This consumer fashion for foreign products helps explain why the opium from British India became so popular in China. Against latter-day nationalist claims that the British came and forced opium down the throats of helpless Chinese consumers, there was in fact an existing system of domestic opium production in China already in place to compete with the import market at Canton (especially in the empire’s western and southwestern provinces). There were also separate avenues for importing the drug overland from Central Asia—and opium from all of those sources was much cheaper than the Indian opium the British brought to Canton. But opium was a luxury good, and its wealthy consumers weren’t looking for a bargain; they were looking for status. Fashionable users of the drug in urban China preferred the opium from British India (the Patna, with its East India Company seal of quality) largely because it was “Western” and therefore seen as far more sophisticated to buy and smoke.

By the late eighteenth century, when British traders began carrying Indian opium in meaningful quantities to Canton, they did so because they knew a market was already waiting for them there. They could not force the drug down anyone’s throat—indeed, they couldn’t even get themselves into the country; all they could do was to carry their opium to China’s southern coast and sell it to Chinese agents. Everything from there on into the Qing Empire was entirely in Chinese hands. Moving forward into the nineteenth century, the extensive smoking of opium emerged as an almost uniquely Chinese social custom, the Canton market for the drug growing to become, primarily for domestic reasons, the most demanding in the world. If opium was illegal in name, it was almost never so in practice, a fact as apparent to outsiders calling at Canton as to insiders within the Qing Empire. As one British dealer testified to a government committee in 1830, “Every now and then there is a very strong edict issued against the trade; but, like other Chinese edicts, it is nearly powerless. It imposes a little difficulty perhaps for the moment, and enables the Mandarins to extort from the dealers.”

22 April 2022

Early Chinese Opium Trade, 1700s

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 193-194:

Robert Bennet Forbes, John’s rosy-cheeked older brother, was a middleman in the drug trade. The Lintin he had just fitted out in Massachusetts was destined for use as a “receiving ship”—based off the southwest corner of Lintin Island, far from the reach of the authorities in Canton, he operated it as a floating warehouse for drug shipments. Foreign vessels coming in from India and elsewhere with cargoes of opium would stop first at Lintin, offload their chests of the drug onto Forbes’s ship or another in the harbor, then proceed up to the Whampoa anchorage outside Canton with their holds empty of contraband and clean for inspection. In certain “money-changing shops” in the foreign compound, their captains or supercargoes could meet with the English-speaking agents of Chinese opium wholesalers (some, but not all, of whom were Hong merchants—since the trade was illegal, the Hong merchants’ monopoly on foreign trade did not apply to opium as it did to tea). After agreeing on a price, the foreign merchants took payment for their opium, while the Chinese dealers sent their own men out to Lintin to retrieve the shipment from the holding vessel.

Robert Bennet Forbes’s job was a simple one. His cargo was not his own; he merely held it on consignment for other traders who had assumed the risk (storms, pirates, market fluctuations) of getting it to south China in the first place. Chinese smugglers took all of the responsibility for moving the drug inland and up the coast—and, eventually, for retailing it within China. They also took responsibility for bribing government officials to ensure that no inspections would be made at Lintin, or at least to make sure that such inspections would be announced well in advance. There were in fact Chinese warships stationed on the opposite side of Lintin Island from Forbes’s ship, off the island’s northeastern shore, but they were under a different county’s jurisdiction than the smuggling anchorage and generally only sailed around the island in order to collect bribes from the smugglers before returning to the northeast again. As captain of the Lintin receiving ship, Robert Bennet Forbes thus bore almost no risk at all. All he had to do was stay put and keep the opium safe, earning a commission for each chest he held. The hardest part of the job, for a young New Englander who loved to sail, was having to stay in one place all the time. For suffering that, he brought in an income that in today’s currency was worth more than $800,000 per year.

The basic fact was that the opium poppy grew very well in British India, which otherwise was a spectacularly unprofitable colonial venture (and which, without the rich profits from the Canton tea trade to offset its losses and debts, would likely have bankrupted the East India Company). European traders learned early on that there was a steady if small market for opium in China even though it was illegal there. As early as 1719 we can find the Chinese demand for the drug making an appearance in The Farther Adventures of Robinson Crusoe, Daniel Defoe’s lesser-known sequel to his novel Robinson Crusoe, where Crusoe, who was rescued from his castaway fate in the previous book, made a run from Siam to China to sell opium, “a Commodity which bears a great Price among the Chinese, and which at that Time, was very much wanted there.” Though Crusoe originally intended to sail north in China to sell it, he was advised to “put in at Macao, where we could not have fail’d of a Market for our Opium.”

There are more formal records of British traders carrying Indian opium to China by 1733, when the East India Company notified the captains of two of its ships of “the late severe laws enacted by the Emperour of China for the prohibition of Ophium,” admonishing them that “you are neither to carry, nor suffer any of it to be carry’d in your Ship to China, as you will answer the contrary to the Hon’ble Company at your peril.” Going forward, the “Honourable Company” refrained from carrying any opium on its own ships, judging that the potential loss of its aboveboard tea trade was not worth the smaller reward to be gained from drug trafficking. That did not end the matter, however, but simply made an opening for independent operators who were more willing to take on the dangers of the illegal trade.

19 April 2022

First Englishman in Lhasa

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 146-147:

Manning was the first Englishman ever to lay eyes on the city (and the last for the remainder of the nineteenth century). His only European predecessors were a pair of Catholic missionaries who had reached the city two hundred years earlier. From a distance, at least, it was the Shangri-La of fables. The grand Potala Palace where the Dalai Lama lived loomed high and white on a hill above the city, visible from miles off, more magnificent in appearance than he had even imagined it could be. But some of the magic was lost on approach. A ceremonial gate they passed through on the road to the city had gilt decorations that caught the sun from afar, but up close the ornaments seemed imbalanced and off-kilter to Manning, reminding him of “pastry work” or “gingerbread architecture.” The blindingly white palace itself was like a hive, swarming with monks in gorgeous robes of deep maroon, but the city below it was poor and rough. The houses were “begrimed with smut and dirt.” Wild dogs with mangy and ulcerated skin ran freely in the streets, growling and digging about for food. In spite of himself, Manning sensed a deep strangeness to the place, an unreality. “Even the mirth and laughter of the inhabitants I thought dreamy and ghostly,” he recalled. “The dreaminess no doubt was in my mind, but I never could get rid of the idea.”

On the advice of his munshi [secretary and translator], Manning pretended to be a Buddhist lama from India, one who happened to be versed in medicine. He hid the fact that he could speak or read Chinese, since it would make the presence of an interpreter suspicious. He also hid that he could speak English, so the two of them only communicated openly in Latin (in which both were fluent, it being the confluence of Manning’s Cambridge education and the munshi’s childhood training by a Roman Catholic missionary). This led to a long chain of interpretation when Manning spoke to Tibetans: someone would first have to translate from Tibetan into Chinese, then Manning’s munshi would translate the Chinese into Latin for him, and he would have to respond in Latin, back along the chain. To avoid standing out—and because he decided he liked it—he performed the kowtow before Chinese and Manchu officials whenever he was asked (a lesser version than that reserved for the emperor, touching the head to the ground three times rather than nine). In fact, he said, he found it so restful to kneel down to the ground after all the walking he had to do that he tried to kowtow as much as possible—including in front of high-ranking Tibetans (which offended his munshi, who said no Chinese would ever do that).

Manning was granted an audience with the Dalai Lama on December 17, 1811. To get to it, he had to climb up hundreds of steps carved into the side of the mountain on which the Potala Palace was built, steps that gave way in time to ladders on which he continued climbing up through the nine floors of the palace, its air rich with the smoke of incense and yak-butter lamps, to reach the high roof with its breathtaking view over the city and the broad, vast plain to the deep blue-white mountains in the distance. A monk escorted him into a smooth-floored reception hall built onto the roof, walls hung with tapestries and its ceiling held up by high, strong pillars. Sunshine streamed down through a skylight. In the middle of the hall, on a throne supported by carved lions, he found a young boy in maroon robes and a pointed saffron hood who appeared to be about seven years old (he had, in fact, just turned six). Manning knelt down before the Dalai Lama and performed the kowtow.

Manning still had his beard, but he had shaved the top of his head in preparation for the audience, so that the boy could lay hands on him. The normally impish Englishman was quieted in the lama’s presence. “His face was, I thought, poetically and effectingly beautiful,” wrote Manning. “He was of a gay and cheerful disposition; his beautiful mouth perpetually unbending into a graceful smile, which illuminated his whole countenance. Sometimes, particularly when he had looked at me, his smile almost approached to a gentle laugh.” They made polite small talk. The Dalai Lama asked about his journey. Manning asked for Tibetan Buddhist books, and asked if someone who spoke Chinese could teach him their contents, though he was gently rebuffed. It wasn’t the conversation that mattered, though, but simply the fact of being in the Dalai Lama’s presence. Unlike Macartney’s audience with Qianlong, there was no power relationship in play, no hidden challenge, no posturing. Just curiosity. And friendliness. All of Manning’s playful cynicism vanished. “I could have wept through strangeness of sensation,” he wrote afterward. “I was absorbed in reflections when I got home.”

18 April 2022

Evacuating Qing China's Shoreline

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 112-114:

In the 1660s, the young Qing dynasty was just twenty years past its conquest of Beijing and still only partially in control of the empire. It faced a pirate navy of more than a thousand ships and 150,000 sailors that had declared open rebellion against the Manchus and called for the restoration of the Ming dynasty. Kangxi had just come to the throne, a mere boy at the time, and he and his advisers recognized that the dynasty’s Manchu forces, which were mounted on horseback, could not possibly hope to master such a large force of pirates on water. So rather than fighting them head-on, Kangxi instead ordered the evacuation of China’s entire southeastern coast.

Nearly a thousand miles of shoreline, from Zhejiang province in the east all the way down to Canton in the south and beyond, was emptied of its inhabitants so the Ming-loyalist pirate fleet would have nowhere to find supplies or conscripts. The evacuation began in 1661 with a zone three miles wide, increasing to ten miles the following year. Lines were drawn (soldiers stretched ropes to mark them), and the population living between the boundary lines and the shore were forced at spearpoint to abandon their homes and villages and move inland, carrying whatever of their possessions they could manage. Behind them, the farms were dug up and the fishing boats and villages burned, leaving nothing for the pirates to find on land except military camps.

The evacuation in the 1660s was horrific from a humanitarian standpoint: a forced relocation of millions of people, leading their farm animals on a slow exodus, carrying the elderly on their backs, into cities and inland regions where they had no land rights and no clear way to make a living. “There was wailing everywhere,” wrote an observer at the time. “The sight was too painful to watch.” But as a military strategy it succeeded. The pirate fleet, unable to obtain supplies on the Chinese coast, abandoned mainland China and sailed across the Taiwan Strait to conquer the Dutch colony that then existed on Formosa (modern-day Taiwan). The coastal evacuation order would be enforced in most areas for more than twenty years, which was how long it took for the Qing dynasty to build a navy sufficient to cross the strait and destroy the pirates on their new base. Once the pirate armada was defeated, the dynasty incorporated Taiwan into its empire and the millions of people who had been removed from the coast were finally allowed to return home.

That victory was so decisive and complete that China’s coast would enjoy a long era of peace afterward. Through the eighteenth century, the only real security issues China’s coastal communities faced were small-scale amateur pirates—poor fishermen, typically, who sailed up the coast to make trouble in the off-season when the winds wouldn’t allow them to go to sea. They hardly merited a centralized military response. In times of need, coastal communities raised their own funds to build watchtowers and guardhouses, and hired local police forces to protect their markets against the predations of bandits—local measures that, up to the early 1800s, were fully sufficient. By the time the new pirate confederation rebelled against the government, the dynasty had not needed an oceangoing navy for more than a hundred years and the ships it had built to conquer Taiwan had long ago rotted away.

17 April 2022

China Envy in Late 1700s

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 9-11:

There were good reasons why the East India Company did not do anything else that might put their little foothold in China at risk. In the eyes of Europeans in the late eighteenth century, the empire of the Qing dynasty was an unequaled vision of power, order, and prosperity. It had long been, as Adam Smith described it in 1776 in The Wealth of Nations, “one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous countries in the world.” Smith believed China to have been at a stable climax of development for eons—at least as far back as Marco Polo’s visit in the thirteenth century—which meant that although it did not have the capacity to develop any further (an advantage he reserved largely for Europe), it nevertheless showed no signs of retreating from its pinnacle of prosperity. “Though it may perhaps stand still,” he insisted, “[China] does not seem to go backwards.”

Enlightenment champions of reason saw in China the model of a moral and well-governed state that needed no church—a secular empire, founded on rational texts and ruled by scholars. “Confucius,” wrote Voltaire with admiration in his Philosophical Dictionary of 1765, “had no interest in falsehood; he did not pretend to be a prophet; he claimed no inspiration; he taught no new religion; he used no delusions.” In reading extracts from Confucius’s works, Voltaire concluded, “I have found in them nothing but the purest morality, without the slightest tinge of charlatanism.” The state that had been founded on those works was, he believed, the oldest and most enduring in the world. “There is no house in Europe,” he observed, “the antiquity of which is so well proved as that of the Empire of China.”

China’s political unity in the later eighteenth century was dazzling not just to British economists and French philosophers but to Americans as well, once they began to emerge as a nation of their own. In 1794, a U.S. citizen of Dutch descent, who had served as interpreter for an embassy from the Netherlands to China, dedicated the published account of his voyage to George Washington, celebrating in particular “the virtues which in your Excellency afford so striking a resemblance between Asia and America.” China was for him the standard by which Western countries could be measured: Washington was virtuous because he exhibited some of the qualities of a Qing dynasty emperor. The highest hope that the writer could muster for the future of his new nation was that Washington, in his “principles and sentiments,” might procure for the United States “a duration equal to the Chinese Empire.”

These were not just Western fantasies. China in the eighteenth century was not only the most populous and politically unified empire on earth, but also the most prosperous. The standard of living in its wealthy eastern and southern cities was easily a match for the companion regions of western Europe, as was life expectancy. To measure by the consumption of luxury goods such as sugar and tea, the quality of life in eastern China in the 1700s appears to have left Europe behind. At the same time, however, due to the Qing government’s tight strictures on foreign trade and residence, China was also seen from outside as impossibly guarded and remote, “the only civilised nation in the world,” as one British writer put it, “whose jealous laws forbid the intrusion of any other people.” The immense riches of the empire were—to the eternal frustration of westerners—always just out of reach.

16 April 2022

Qianlong Emperor's Achievements

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 49-50:

Qianlong was enthroned in 1735 at the age of twenty-four and would rule longer than any Chinese emperor ever had, or ever would again. He presided over massive frontier wars in Central Asia and sponsored cultural projects of a scale unimaginable in the West. (At a time when there were more book titles in China than in the rest of the world combined, he oversaw the compilation of a literary encyclopedia that ran to more than thirty-six thousand volumes in length and would fill a large room.) He was an accomplished and prolific classical poet and a renowned practitioner of calligraphy, and with a firm hand for government and a taste for over-the-top displays of power and beneficence he guided the empire to its apex of prosperity.

The first Qing rulers had begun the work of carving out their empire’s borders after the conquest of Beijing from the Ming dynasty in 1644. Over generations they expanded westward into Central Asia, beyond the original heartland of the fallen Ming, assimilating new territories in the southwest and the island of Taiwan to the east. But it was not until Qianlong’s reign in the eighteenth century that the Qing Empire reached its fullest flower, largely setting the boundaries for the Chinese state that exists today. At its peak under Qianlong, the empire reached all the way from Manchuria in the northeast to the provinces of Guangxi and Yunnan in the southwest, and from Taiwan off the eastern coast deep into Central Asia with the territories of Xinjiang and Tibet in the far west. It was an empire of four and a half million square miles, larger than all of Europe put together.

When Macartney came to pay his respects, Qianlong was just turning eighty-two. He was a sturdy man with drooping eyes, slight jowls, and a long mustache. His reign had been long enough that he was the same ruler who sat on the throne at the time of James Flint, the same who had originally ordered British trade confined to Canton. By the time of the Macartney embassy, Qianlong had ruled China for nearly fifty-eight years. He was not alone in his longevity either, for his grandfather Kangxi had reigned for sixty-one years, from 1661 to 1722, the two of them forming the backbone of one of the most powerful dynasties in China’s long history.

15 April 2022

Chinese Civil Service System in late 1700s

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 54-55:

For all the admiration of the Chinese examinations by outsiders, however, by the late eighteenth century the system was beginning to fail. It had always been extremely difficult to pass the exams, but as the population expanded in the Qianlong reign there were far more candidates than before who wanted to take part in the competition, and proportionally fewer government jobs with which to reward them. The competition became more and more fierce, and great numbers of talented candidates were left behind, creating a glut of highly educated men with few career prospects. They generally found unsatisfying work as tutors, secretaries, and bureaucratic underlings, unreliable jobs that required a high level of literacy and education but were transient and depended entirely on the patronage of their individual employers. These men were failures in the eyes of their parents, many of whom had spent lavish sums on their sons’ educations in hopes of their becoming officials and bringing power and prestige to the family.

Furthermore, even those scholars who did manage to pass the examinations might still have to wait ten or twenty years before a position in the imperial bureaucracy opened up to them through normal channels. By consequence, the system of civil appointments became fertile ground for bribery schemes. Those who controlled the appointments demanded huge fees from qualified candidates before they would give them a position—in essence, forcing them to purchase their jobs, and then often making them pay yearly sums to hold on to them. As the practice spread, great numbers of officials began their careers in heavy financial debt to their superiors—debts they were expected to make up for by squeezing bribes from their own inferiors or finding other ways (such as embezzlement) to supplement their meager salaries and pay for the fees and gifts that were required of them.

At the lowest levels, where the vast imperial governing apparatus reached the level of the common people, this pyramid of graft resulted in widespread petty oppression and outright cruelty by minor officials towards the populations they governed—especially the peasants and those on the margins of society, who were most vulnerable to their extortions. Such victims had little or no effective legal recourse if they were harassed or beaten or had their meager property taken by greedy officials. All they could really do, if they were desperate enough, was to revolt.

14 April 2022

Origins of the Opium War

From Imperial Twilight: The Opium War and the End of China's Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. xxiv-xxvi:

This is a book about how the Opium War came to be—that is, how China declined from its eighteenth-century grandeur and how Britain became sufficiently emboldened to take advantage of that decline. The central question of the war, as I see it, is not how Britain won, for that was never in serious doubt—in military terms the Opium War pitted the most advanced naval power in the world against an empire with a long and vulnerable coastline that had not needed a seagoing navy in more than a hundred years and so did not have one. Rather, the central question is a moral one: how Britain could have come to fight such a war in China in the first place—against, it should be noted, savage criticism both at home and abroad.

A sense of inevitability has always been projected backwards onto this era in hindsight, as if the war were always meant to be, but when viewed in the light of its own time the Opium War could hardly have been more counterintuitive. Aside from the audacity of sending a small fleet and a few thousand troops to make war on the world’s largest empire, critics at the time pointed out that Britain was putting its entire future tea trade at risk for only the vaguest and least justifiable of goals. It seemed paradoxical in the 1830s that a liberal British government that had just abolished slavery could turn around and fight a war to support drug dealers, or that proponents of free trade would align their interests with smugglers. If we revisit these events as they actually unfolded, rather than as they have been reinterpreted afterward, we find far more opposition to this war in Britain and America on moral grounds, and far more respect for the sovereignty of China, than one would otherwise expect.

One reason a reader might not expect such opposition to this war is that we too easily forget how much admiration China used to command. Because of its great strength and prosperity in the late eighteenth century, Europeans viewed China in a dramatically different light than they did the other countries of the East. At a time when India was an object of British conquest, China was an object of respect, even awe. Occasional calls for the use of naval power to advance trade there were struck down as self-defeating, while British traders in Canton who made trouble were generally ordered home or at least reminded to behave themselves. In commerce, China held all the cards. In stark contrast to the British Orientalist vision of India in the late eighteenth century—lost in the past, childlike and divided, a prize to be captured and controlled—China represented instead a strong, unified empire and another living civilization.

For that reason, readers who are familiar with the East India Company as a force of imperial conquest in India will find a very different face of it in China. When young Britons went to work for the Company overseas, it was India that attracted the military adventurers, the administrators, those with dreams of empire. The bean counters, by contrast, went to Canton. (And remarkably, it should be noted that in the early nineteenth century those bean counters in their quiet factories served the Company’s bottom line in London far better than the conquerors of India did.) Even as goods—especially cotton and later opium—flowed steadily from India to China, there was almost no professional circulation between the two regions, where Company agents developed largely separate worldviews. When visitors acculturated to British India intruded into the separate world of Canton, they would often cause problems—not just with the Chinese, but with their more experienced countrymen as well.

The Opium War would force those two worlds together, tainting the old admiration and respect for China with a taste for blood. The war would never be universally popular in Britain, however, and fierce opposition to the use of force in China would linger for a long time afterward (another controversial China war in the 1850s would entail the dissolution of Parliament and new elections to disempower the British lawmakers who tried to stop it). Nevertheless, by the time the war finally began, an ongoing collision of two competing worldviews—between those British who respected China’s power and prosperity and those who said it was no more enviable than India—reached a crucial threshold.

10 April 2022

Latin America's IMF Era

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2010), Kindle pp. 576-577:

Essentially, Latin America faced an acute problem of governance after the debt crisis of the 1980s. The IMF had defined the main objectives of policy, which were to curb inflation, deregulate and privatize the economy, and service the foreign debt. But if the goals were clear, the means of achieving them were not. The crux of the problem was finding effective authority to see through the IMF reforms, but effective authority depends on legitimacy, which rests, in turn, on a consensus as to the founding principles of the state. And, as we have seen in this book, the inherent weakness of the state in Latin America lay precisely in a chronic inability since Independence to establish a lasting national consensus of this kind (see Chapter 9, pp. 374–7). All the same, the IMF required governments in these weakly based states to slash public spending and lay off huge numbers of workers in societies that were already the most unequal in the world. Even so, where one might have expected a return to the kind of revolutionary struggles or military dictatorships that marked the 1960s and 1970s, democratic politics endured in virtually all the republics throughout the 1990s and beyond.

The persistence of democracy was due more than anything to the collapse of communism in Eastern Europe in 1989–90, and then in the Soviet Union itself in 1991, bringing to an end the Cold War between the USSR and the USA. As a result of this collapse, Marxism lost its ideological force – Cuba was not regarded as a viable model in the 1980s and 1990s – but it also weakened the extreme right, which could no longer block social reform by inviting the US government to intervene in order to prevent Soviet infiltration into its ‘backyard’. Internal and external events thus drove Latin American politics towards a vaguely defined centre ground, but if the result was democracy, this was democracy that rested on a consensus of despair, for there was nowhere either for the left or the right to go but to the ballot box in order to try to fix the problems of the wrecked economies.

The question was how to induce electorates to swallow the medicine prescribed by the IMF. Governments had to consult the people to win some measure of consent, and electorates grown weary of inflation, violence and disorder did tend to consent to free-market reform in the 1990s. Voters were fed up with the empty promises and corrupt deals associated with traditional parties, so they tended to elect new or independent candidates to the presidency, as in Brazil, Peru, Colombia, Venezuela, Bolivia, Ecuador, and even in Mexico after the ruling party had been forced to give up rigging elections. Many countries reformed their constitutions. In a few cases, such as Colombia or Chile, it was to strengthen democratic institutions by improving representation and accountability. In most others it was to maintain continuity of reform by allowing a president to serve additional consecutive terms. In others, notably in Peru (1993), it was to move towards authoritarianism, or even veiled dictatorship. ‘Democracy’ was still a fairly malleable concept in Latin America, too often permeated by more traditional practices such as patronage and clientship, caudillo-style personalism and electoral manipulation (see Chapter 9, pp. 346–9). Thus, in a few republics such as Peru, Venezuela, Bolivia and Ecuador, there emerged what has been termed ‘delegative democracy’, a new version of the old tradition of caudillo populism, whereby executive power was ‘delegated’ to a charismatic leader via the ballot box, giving him a mandate to override the institutional checks and balances represented by the legislature or judiciary.

The quest for effective authority was shaped by the complexion and recent history of individual republics, but problems of governance were critically affected also by the ebb and flow of the globalized economy, over which nation states had little control. During the years of international expansion – roughly from 1992 to 1998 – governments were able to carry out liberalizing reforms with considerable public backing, but the Thai devaluation crisis of 1997, followed by Russia’s default in 1998, created a backwash that spread unrest through Latin America until about 2002, cutting growth and overwhelming governments, some of which fell to furious protestors. (The period 1998–2002 became known as ‘the lost half-decade’.) However, when world trade expanded from 2002, most Latin American countries experienced an extraordinary boom in exports of oil, minerals and agricultural goods to the developed world, and especially to China, so problems of economic management tended to ease once again. Then in late 2008, the globalized economy lurched into recession once more after a massive banking crash in Wall Street and London, with consequences for political stability and liberal democracy that were hard to foresee.

04 April 2022

Cuban Revolution of 1933

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 441-443:

The election to the presidency of the Liberal Gerardo Machado in 1924 at first promised an end to the graft of the previous administration. Enjoying widespread popularity, Machado embarked on a programme of public works and measures to diversify the economy. But the fall in sugar prices of the late 1920s led him to repress strikes and protests, and when he got a controlled congress to grant him a further six-year term in 1928, he faced an explosion of anger from the student movement. As Machado’s rule became increasingly repressive, students and middle-class intellectuals took to violence and terrorism. The students formed a Directorio Estudiantil, which was to play a continuing oppositional role in the island’s politics. In 1931 there appeared a secret organization calling itself the ABC, whose members were young middle- and upper-class nationalists inspired by the Peruvian Haya de la Torre’s APRA movement. ABC pistoleros resorted to assassinations and shoot-outs in the streets with Machado’s brutal police. The unrest spread as labour unions joined the opposition to the dictator.

Reluctant to send in troops as in the past because of the nationalist agitation, Washington used its ambassador, Sumner Welles, to negotiate an end to Machado’s rule. But the nationalists resented Welles’s intervention and called a general strike in August 1933 (the Communist Party, fearing a US invasion, withdrew its support for the strike and tried to do a deal with Machado, which discredited it in the eyes of students and nationalists). Machado finally bowed to the pressure and went into exile. There followed an upsurge of revolutionary activity – occupations of factories and sugar mills by workers, looting of wealthy districts, and mob attacks on collaborators with the dictatorship.

The moderate government of Carlos Manuel de Céspedes, installed by the army in concert with Sumner Welles, was unable to control the situation. In September 1933 a revolt of non-commissioned officers – among whose leaders was a Sergeant Fulgencio Batista – unseated Céspedes and handed over power to a five-man committee chosen by the Directorio Estudiantil. The Havana students had succeeded in creating a nationalist revolution and, after some confusion, they chose one of their professors, the patrician Dr Ramón Grau San Martín, as provisional president. Workers now occupied sugar mills, in some cases demanding wage rises at gunpoint; strikes, riots and gun battles broke out all over the island. Grau’s government passed a number of radical measures, such as the expropriation of a small number of US-owned sugar mills, some redistribution of land, the limitation of the working day to eight hours, restrictions on the employment of cheap non-Cuban labour from other Caribbean islands and the extension of the franchise to women.

Still, the revolution of 1933 was primarily the work of student agitation and, apart from the expected hostility of the USA and the Cuban business community, it was opposed by the Communists, the ABC nationalists and by ousted army officers, who staged a number of revolts. Four months later Grau’s government was overthrown by a coup led by Fulgencio Batista, who effectively became the strongman of Cuba for the next decade, ruling at first through presidential stooges and then, from 1940, in his own right.

Batista was a military populist, a mulatto from a very humble background who had risen from the ranks and whose core constituency remained the enlisted men of the armed forces. As befitted a Latin American leader of the 1930s, he presented himself as a benefactor of the people, using the resources of the state for nationalist and redistributive ends. In 1934 the Platt Amendment was at last annulled, and a larger US quota for sugar helped raise production from the doldrums of the 1920s and early 1930s. Although Batista had the backing of US and Cuban business interests, he took steps to cultivate the trade unions, passing social welfare legislation, building houses for workers and creating employment through large public works programmes. A new labour confederation, controlled by a Communist leadership, was incorporated into the strongman’s political machine. In the countryside, Batista redistributed some land and, following the example of the Mexican Revolution, initiated a programme of rural education, often staffed by army personnel.

Dismayed by the failure of the 1933 revolution, the students and radical nationalists formed a new party in memory of José Martí, the Partido Revolucionario Cubano-Auténtico, which became the principal opposition to Batista. Terrorism continued to be a habitual feature of political life, but by the late 1930s Batista felt secure enough to permit elections for a constituent assembly. In 1940 a new nationalist, social-democratic constitution was passed by a Batista-dominated assembly, which included universal suffrage, state rights over the subsoil, state ‘orientation’ of the economy and labour rights such as a minimum wage, pensions, social insurance and an eight-hour day.

The constitution of 1940 ushered in a period of legitimate democratic governments, though there was no weakening of the Cuban tradition of political gangsterism and corruption. Batista won a clean election in 1940 and continued to implement his populist programme in the improved economic climate fostered by the war and the consequent US aid. Yet radical nationalism reasserted itself in 1944; Batista lost the election – having forborne from rigging it – to Dr Grau of the Auténticos, and retired to the USA a wealthy man.

01 April 2022

Brazil's Economic Miracle

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 428-429, 435:

The reasons for the failure of the guerrillas are complex. With their predominantly middle-class, university-educated cadres they were unable to break out of their political isolation – the clandestine Communist Party disapproved of the guerrillas’ strategy and blocked their access to working-class organizations. The terrorist attacks on military targets precluded the emergence of any sympathetic groups within the armed forces who might have staged a coup d’état, this being the usual short cut to power for progressive movements in Latin America. But, decisively, the guerrilla campaign coincided with the long-awaited upturn in the economy. From 1968, while the guerrillas were robbing banks and bombing barracks, life was getting better for the middle classes and the skilled workers in the cities, which is where, in a rapidly urbanizing country, the political fate of the nation would be decided. In short, what finally put paid to the prospects of the urban guerrillas was the arrival of the Brazilian ‘economic miracle’.

As far as the generals were concerned, the ‘miracle’ obviated the need for an explicit political ideology to run the state. The tremendous popular enthusiasm generated by the idea of an economic miracle was manipulated by the junta to rationalize their continued suspension of full democratic rights. The economic upswing was ‘miraculous’ in that it seemed to be a sudden take-off into self-sustaining industrial growth, the hallmark of a modern economy. Brazil was at last on its way to world-power status from the doldrums in which it had found itself for the best part of the 1960s.

The Brazilian rate of economic growth was indeed amazingly good: in 1968–74 the economy grew at an average yearly rate of between 10 per cent and 11 per cent. Even after the sudden rise in the world price of oil in 1973, which seriously damaged all the industrial economies, the Brazilian rate of growth averaged between 4 per cent and 7 per cent a year. By the mid-1970s the volume of exports had quadrupled since 1967. Far more significant was the fact that manufactured goods had replaced coffee as the major component of exports: the stubborn Latin American problem of monoculture – the dependence on the export of a single primary commodity – had been solved.

Without doubt, a substantial industrial revolution had occurred in Brazil; and it had largely been engineered by technocrats sponsored by the armed forces. But this success was built on the programme of industrialization achieved over many years since the foundation of the Estado Nôvo by Getúlio Vargas in 1937. Underlying the intervening conflicts of parliamentary politics, there had been a remarkable continuity in the course of Brazilian development from the Getúlio Vargas era to the military governments of the 1960s and 1970s. Development continued to be based on a sustained drive for industrial growth largely financed by foreign loans and investment, but directed by the state. The military governments of the 1960s and 1970s kept all basic industries and utilities under state control; they largely retained the nationalist policy of import-substitution industrialization by selective tariffs; and they also preserved the core of the social welfare and labour legislation of the Estado Nôvo.

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Brazil’s extraordinary drive to modernize in the twentieth century produced a powerful industrial economy in the space of little over three decades. The costs were enormous: acute dislocations of regional economies, the destruction of virgin lands, an imbalance between the countryside and the cities, and deep cleavages between the working class, industrial capitalists and the middle classes. And yet, industry did not become productive enough to absorb the potential labour force, while the countryside remained under-productive and socially divided. Successive governments tried to force the pace of industrial development, as well as increasing spending on welfare programmes to alleviate the social misery. The results were vicious circles of inflation and budget deficits, which spiralled uncontrollably, robbing governments of authority. In 1964 the armed forces intervened to try to restore order, but by the late 1970s they too had been drawn into the spiral of inflation and debt; their historic pursuit of ordem e progresso had led, paradoxically, to a situation where economic progress had become the enemy of social order.

The Brazilian crisis of the 1980s was as much a crisis of the state as of the economy. In the medium term economic improvement might come through an upturn in the world economy combined with a successful anti-inflation programme and international assistance with debt relief. But a lasting settlement of the crisis would require the emergence of a legitimate democratic state, whose representative institutions could command the confidence of the nation as a whole.

30 March 2022

Latin American Debt Crisis, 1980s

 From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 364-367:

The mounting problems caused by the economic distortions of import-substituting industrialization [= ISI] and the associated weakening of the state came to a head in the 1980s. The crisis had been deferred in the 1960s by strong world growth, and in the 1970s, when international demand was slack, by foreign loans. But a sudden change in the world financial system effectively cut off the flow of capital to Latin America.

In August of 1982 the Mexican government announced that it was unable to pay the interest on its debt to foreign banks. Mexico was followed shortly by virtually all the Latin American countries, including Cuba. (Suspension of debt payments occurred also in African and Asian countries, but the sheer size of the Latin American debt focused international attention on the continent.) The total outstanding Latin American debt in 1982 was estimated at $315.3 billion, although over $270 billion was owed by just five countries – precisely those which had undergone the fastest ISI growth in the 1960s and 1970s. Brazil was the largest debtor, owing $87.5 billion; Mexico owed $85.5 billion, Argentina $43.6 billion, Venezuela $31 billion and Chile $17 billion.

What had caused the crash? The immediate factor was the steep rise in US interest rates in 1979–82. This was a response to the high rates of inflation and the consequent weakness of the dollar caused by the producers’ cartel, OPEC, sharply raising the price of oil in 1973 and again in 1979. A world recession followed, which had a disastrous effect on the economies of Latin America: commodity prices started to fall on world markets just when higher export earnings were needed to cope with sharply rising interest rates on the foreign debt.

The bonanza of lending and borrowing that Latin American governments and Western banks had indulged in throughout the 1970s had its origins in the very phenomenon that would cause it to come to an abrupt end a decade later: the OPEC cartel’s oil-price rises of 1973 and 1979. High oil prices allowed producer countries, especially the Middle Eastern Arab states, to build up huge surpluses on their balance of payments. Profits from oil exports were too large to be fully absorbed by investment in their domestic economies, and so these OPEC countries deposited vast sums of money in European and North American banks. Western bankers then set about looking for ways of getting a good return on these windfall deposits, and their most willing clients were the developing countries of the Third World, who were hungry as always for development capital.

Latin America was especially susceptible to the blandishments of the Western banks, for in the early 1970s, as we have seen, the most advanced of the industrializing countries in the region had come to the limit of the ‘hard’ phase of import-substitution; the process of state-subsidized inward-looking development could be kept going only by borrowing abroad to cover the yawning deficits between national income and expenditure. There followed a mad spiral of irresponsible, profit-driven lending and unwise borrowing, in which Western bankers as much as Latin American officials appeared to overlook the implications of taking out huge loans on ‘floating’ instead of fixed interest rates. However, after the shock of the second oil-price rise in 1979, conservative administrations in the USA and other industrial countries like Britain decided to bring their domestic inflation under control by restricting the supply of money and credit; this economic policy choked off demand in the West and produced a worldwide recession. International interest rates on foreign debt suddenly started to ‘float’ ever upwards until by the middle of 1982 most Third World countries found it impossible to meet their interest payments.

Indebtedness and high inflation were not, therefore, peculiar to Latin America. In fact, most governments in the industrial countries had been running up debts during the 1970s. The US budget deficit in 1982 was actually larger than that of the worst Latin American debtors, and throughout the 1980s the Reagan administration, for fear of electoral unpopularity, was unwilling to cut it by raising taxes or reducing imports. Yet it was the Latin American debt and not the US deficit which caused international alarm, because a country’s economic health was judged according to its perceived ability to overcome its financial difficulties, a factor expressed in terms of the ratio of interest payments to export earnings. Latin American countries scored badly here, given their relative neglect of the export sector in the pursuit of import-substitution. In 1982 most had ratios in excess of 20 per cent of interest payments to exports; Brazil and Argentina came off worst with ratios of 57.1 per cent and 54.6 per cent respectively, while Mexico, despite being a major oil exporter, had a ratio of 39.9 per cent. In other words, the economies that had grown fastest in the 1970s were the most deeply indebted in the 1980s.

What had gone wrong with ISI development? In essence, it had failed to cure the underlying malaise which had begun to show itself as early as the 1920s – lack of productivity. With the aim of achieving self-sufficiency, economic planners had concentrated on substituting industrial imports by setting up national industries and protecting them behind high tariff walls to the general detriment of agriculture and the export sector. (Brazil was a partial exception since from the mid-1970s it had begun to subsidize industrial exports – an expensive exercise that did not tackle the underlying problem of productive efficiency.) National industry had been overprotected for too long and had failed to become efficient and competitive: the price of its manufactures was often up to three times the world price. Latin American economies therefore ended up with not only an unproductive export sector, dominated still by low-value primary commodities, but also an unproductive industrial sector, which nevertheless consumed expensive imports of technology. The chronic shortfall between exports and imports resulted in high inflation and mounting debts.

To make matters worse, the debt problem had been badly aggravated by the financial instability caused by hyperinflation in the 1970s. As confidence in the economy evaporated in the late 1970s, there occurred massive capital flight. Instead of investing their money at home – where the currency was virtually worthless and industries regularly made losses – rich Latin Americans put it into real estate abroad or deposited it in the very banks that were issuing loans to their own governments and companies. Huge sums were taken out of these countries: the World Bank estimated that between 1979 and 1982, $27 billion left Mexico, nearly a third of its foreign debt in 1982, and $19 billion left Argentina, whose debt in 1982 was $43.6 billion. (Brazil and Colombia were relatively unaffected because of their sustained growth and high domestic interest rates.) US and European bankers colluded fully in this crazy financial cycle, pressing high-yield loans on Latin American governments while turning a blind eye to the lucrative deposits coming in from private Latin American sources (which were more often than not the indirect recipients of those very loans).

When the crash finally came, the wage-earners and the poor felt it most: inflation soared even higher in the 1980s than in the 1970s, real wages fell, and government spending on food subsidies, transport, health and education was slashed. In 1980–84 overall growth in Latin America fell by nearly 9 per cent. Consumption per capita dropped by 17 per cent in Argentina and Chile, by 14 per cent in Peru, by 8 per cent in Mexico and Brazil. Urban unemployment doubled in Argentina, Uruguay and Venezuela between 1979 and 1984, reaching unprecedented proportions everywhere else.

26 March 2022

Latin American Industry in World War II

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle p. 332:

The Second World War turned out to be a watershed for Latin American industrialization. The worsening international situation had exacerbated the historic rivalry between the armed forces of Brazil and Argentina. Sensing the drift to war in Europe, the military establishments in both countries wanted to develop their own armaments industries instead of relying on imports. But the manufacture of arms required the setting-up of steel and electrical industries, and so from the 1940s the armed forces of Brazil and Argentina pressed their governments to develop an industrial base. Furthermore, as the outbreak of war created strong international demand for raw materials and foodstuffs, the Latin American export-economies boomed, and as wartime conditions abroad reduced the flow of imports, especially luxury goods, Latin American countries were able to build up large surpluses in their balance of payments: this enabled national debts to be paid off and led to the accumulation of domestic capital for investment in industrial projects.

The USA played a decisive part in fostering industrial development during these years. Needing Latin American raw materials for its war effort, it offered loans, technical expertise and equipment to assist the Latin American countries in their programmes of industrialization. During the early 1940s numerous US missions went to Latin America and signed trade agreements. The major republics duly declared war on the Axis powers and supplied the Allies with minerals and commodities. The notable exception was Argentina, where sympathy for Italy and Germany within the military junta caused it to adopt an awkward neutrality, for which it forfeited the kind of technical and financial assistance from the USA that Getúlio Vargas was getting for Brazil. The lack of US aid was an important cause of the economic difficulties which General Perón had to face in the post-war years and which contributed to his downfall in 1955. Still, even though the USA helped Latin American countries to initiate industrial development, the policy of industrialization as such was the late product of the nationalism that had evolved since the turn of the century, intensifying in the 1920s and 1930s.

24 March 2022

Argentina's Boom Years

From The Penguin History Of Latin America, by Edwin Williamson (Penguin, 2003), Kindle pp. 277-278:

With Buenos Aires at its head, the new Argentina was set upon the road to stability and modernization. In the course of the 1860s and 1870s, the liberal presidents Mitre, Sarmiento and Nicolaás Avellaneda created the institutions of a centralized nation state: a professional army, an integrated judicial system, a national bank, a system of public schooling, public libraries, an academy of science and other technical institutions. The railway and telegraphic communications began to link the hitherto fractious conservative provinces to Buenos Aires and, through it, to the world outside. The 1870s were also a time of expanding frontiers and absorption of massive new territories. Victory in the Paraguayan War (1865–70) yielded territory in the north and north-west. Then, in the south, General Julio Roca led another Desert Campaign (1879–80), which exterminated or reduced the nomadic Indians of the pampas, releasing vast acres for settlement and cultivation.

From 1880, the year in which Buenos Aires was constitutionally recognized as the federal capital of the nation, Argentina embarked on an astonishing rate of growth – sustaining an annual average of at least 5 per cent until 1914 – to become one of the richest nations in the world. The territorial acquisitions of the 1870s invigorated the economy, based as it was on cattle, sheep and, increasingly, cereals. As always in Argentina, there was a pressing need for labour, and now more so than ever – labour to work the land, to fence in and convert the barren pampas into wheatfields, and to lay the railway that would link up the provinces and turn the disparate regions into an integrated, modern nation. European immigration was therefore encouraged, and workers – mostly from Italy and Spain – flooded into this vast, empty country. In 1870 the population was less than 2 million; in the next fifty years approximately 3.5 million immigrants would come to Argentina.

The capital investment and technical expertise required for such a massive economic transformation were beyond the resources of a country that had been continually drained by military upheavals and whose economy had been based on rudimentary cattle-raising. Such resources were provided overwhelmingly by the British, who became the major customers for Argentine wheat and meat, the latter now available for export to Europe thanks to faster steamships and the introduction of frigoríficos (meat-chilling plants). A bilateral pattern of trade emerged: Argentina imported manufactured goods from Britain in exchange for her exports of foodstuffs for the British industrial working classes. However, British business also established a commanding position in the internal structure of the Argentine economy: British companies owned the railways, the telegraph, the new meat-processing plants and many of the banks and merchant houses operating in Buenos Aires; this made Argentina potentially vulnerable to external economic pressures, though it was not perceived to be a problem by any political force in the country at the time. A significant Anglo-Argentine community came into being, its upper echelons setting the social tone for the new plutocratic estanciero élite.

There were other structural imbalances. The opening up of the new territories after the ‘Conquest of the Desert’ did not lead to the emergence of a rural middle class of medium-sized farmers, as had occurred in the Midwest of the USA and as Argentine social reformers had advocated. The sheer volume of land was too great for the number of available purchasers; over-supply kept prices low until the end of the century and this cheap new land was snapped up by established landowners and merchants, who were able to expand their existing holdings. Impoverished European immigrants, on the other hand, could not initially afford substantial holdings; they started off as tenant farmers or sharecroppers in the hope of eventually purchasing their plots and extending their property, as in fact many of them did. Yet the pull of world demand for Argentine foodstuffs was such that agrarian export development encouraged ever greater concentration of resources, so that the pattern of distribution of new land in the end came to resemble the classic latifundia, the huge estates characteristic of the Hispanic seigneurial regimes established in America since the sixteenth century.

The immigrants filled jobs in industry and public works, and worked as seasonal labourers in the countryside, returning to live in the cities out of season. Wages in the country were generally good – good enough to attract the golondrinas, the ‘swallows’ who arrived from Italy and Spain for the harvest and then returned home. But most immigrants stayed and settled in the cities, especially Buenos Aires, where they suffered the vicissitudes of inflation and recession. Towards the end of the century, the market became over-supplied with labour and wages began to fall, exacerbating social tensions. Argentina’s transformation in the last quarter of the century thus resulted in a strangely skewed economic structure: the rural economy was in the hands of a relatively small creole élite of estancieros, the cities were inhabited by a large and growing proletariat, many of foreign extraction, while the booming export-economy was dominated by British financial and commercial interests.