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The rise and fall of Augustine Heard & Co.: The shift in Sino-US trade relations amid socioeconomic and technological changes in the mid-19th century (Cantonese)

16 Mar 2019 16:00 – 18:00
Augustine Heard & Co. (AHC) was one of the largest American trading houses in China during the late 19th century, profited hugely from the exports of commodities such as silk, tea, and porcelain amid the two Opium Wars. From the 1840s to 1870s, AHC went through many of the defining moments in the modern history of China: from the early days of the Canton Cohong system, the establishment of Hong Kong as a colony and trade emporium, and to the opening of treaty ports along China’s coastal areas and river systems. The rise and fall of AHC also coincided with or even facilitated China’s modernization progress, when the country underwent unprecedented changes in its economic system, social institutions, and general business practices and cultures.
AHC was founded in 1840 by Augustine Heard (Senior), the son of a wealthy merchant in Massachusetts and a partner of Russell & Co., then the largest American trading firm in East Asia. Equipped with the know-how of dealing with local Chinese intermediaries and the bureaucratic red tapes, Augustine Heard built his own business following the practices of “commission houses” that helped US importers source tea and other merchandises with the capital provided by them, and earned the commission on the cost of export.
AHC’s business thrived between the 1840s and 1850s since relocating its head office from Canton to Hong Kong (where the premise survives until today as the Former French Mission Building), when the company’s New England shipbuilding heritage helped it build its own fleet of clippers. With the huge volume of merchandise changing hand and speedier access to information such as weather and crop harvest, the company had the advantage of anticipating fluctuations in commodities prices. Supported by a closely-knit kinship of four nephews, AHC expanded its businesses into insurance, storage, and even ice making and rice cleaning, while opening branch offices in Shanghai, Amoy, Ningbo, Jiujiang, Hankou, Tianjin, as well as Bangkok, Yokohama, and Nagasaki.
By the 1870s, however, changes in technologies, competition, and financial institutions started to render traditional commission house model obsolete. The proliferation of telegraph networks reduced lag time between orders and transactions, helped smaller merchants get up-to-date market information and secure faster credits from the bank. Local Chinese merchants also grew their bases in knowledge, capital, and technology, and bypassed traditional intermediaries such as AHC in dealing with overseas importers or buyers directly.
In this workshop, a case written by Harvard Business School will be presented, discussed, and analyzed collectively by the participants. By re-examining the key decisions the Heard family faced in the 1870s, participants can immerse themselves in the complex socio-economic, technological, and geopolitical environments of the late 19th century, when Sino-US trade relationship underwent major upheavals amid wars and civil unrests in both countries. The case also helps its readers learn how the US and other European merchants lived in Canton and other treaty ports, how Hong Kong instrumentally facilitated maritime trade and international finance of the time, and how China modernized its social and economic institutions and groomed a new class of social elites.
Free with museum admission.Registration required.
Keith Wong, Former Senior Researcher at Harvard Business School Asia Pacific Research Centre