Paul E. Fontenoy. THE CONUNDRUM OF THE AMERICAN CHINA TRADE, 1784-1844. (Under the direction of Robert J. Gowen) Department of History, April 1995.

American efforts to solve a group of inter-connected problems dominated the history of the first sixty years of United States' trade with China. The Chinese empire was essentially self-sufficient; there were few foreign commodities that the Chinese found desirable. The United States had a voracious appetite for China's products. American merchants believed that China's teeming population offered the prospect of a virtually limitless market if U.S. traders could uncover the single, highly profitable product that was irresistible to the Chinese. The poverty of the general populace, however, rendered this belief illusory. Moreover, Chinese discernment combined with the reality of a narrow consumer base made it perilously easy to oversupply and depress or destroy the market for any product that attained momentary popularity.

For a half-century after 1784 the trade balance was markedly in China's favor, before it reversed to American advantage in the 1830s. The deficit had to be made up in silver, which was in short supply in the United States, increasing the urgency of the need for a widely acceptable product. Americans followed the British in successfully importing opium, illegally, into China, but this created further problems. British control over the major sources of the drug eventually led American participants in the trade to become commission agency firms based in China whose principal business was in Asia itself, thus distancing themselves from the economy of the United States. Opium drained China financially, preventing an expansion of the market for American goods, while American firms' agency status limited their share of the outflow of silver. The very commodity that bade fair to fulfill American expectations limited their scope.

Most studies of America's China trade have concentrated on its economic or cultural impact on the United States. The operation of the trade, particularly the significance of the shift to agency houses based in China, have been largely ignored. Earlier studies have overlooked opium's overall importance for American trade, and the ironic limitations it imposed on successful expansion into the Chinese market.