A Place from Which to Trade

In its early days, Hong Kong was regarded as an uninviting prospect for
settlement. A population of about 3 650 was scattered over 20 villages and
hamlets, and 2 000 fishermen lived on board their boats in the harbour. Its
mountainous terrain deficient in fertile land and water, Hong Kong
possessed only one natural asset - a fine and sheltered anchorage. Largely
the reason for the British presence, which began in the 1840s, Victoria
Harbour was strategically located on the trade routes of the Far East, and
was soon to become the hub of a burgeoning entrep矌 trade with China.

Hong Kong's development into a commercial centre began with British
settlement in 1841. At the end of the 18th century, the British dominated
the foreign trade at Canton (Guangzhou) but found conditions
unsatisfactory, mainly because of the conflicting viewpoints of two quite
dissimilar civilisations.

The Chinese regarded themselves as the only civilised people and
foreigners trading at Canton were subject to residential and other
restrictions. Confined to the factory area, they were allowed to remain
only for the trading season, during which they had to leave their families
at Macau. They were forbidden to enter the city or to learn the Chinese
language. Shipping dues were arbitrarily varied and much bickering
resulted between the British and Chinese traders. Yet, there was mutual
trust and the spoken word alone was sufficient for even the largest
transactions.

Trade had been in China's favour and silver flowed in until the growth of
the opium trade - from 1800 onwards - reversed this trend. The outflow
of silver became more marked from 1834, after the East India Company
lost its monopoly of the China trade, and the foreign free traders, hoping
to get rich quickly, joined the lucrative opium trade which the Chinese
had made illegal in 1799. This led to the appointment of Lin Zexu (Lin
Tse-hsu) in March 1839 as special Commissioner in Canton with orders
to stamp out the opium trade. A week later, he surrounded the foreign
factories with troops, stopped food supplies and refused to let anyone
leave until all stocks of opium had been surrendered, and dealers and
ships' masters had signed a bond not to import opium on pain of
execution. Captain Charles Elliot, RN, the British Government's
representative as Superintendent of Trade, was shut up with the rest and
authorised the surrender of 20 283 chests of opium after a siege of six
weeks.

Elliot would not allow normal trade to resume until he had reported
fully to the British Government and received instructions. The British
community retired to Macau and, when warned by the Portuguese
Governor that he could not be responsible for their safety, took refuge
on board ships in Hong Kong harbour in the summer of 1839.

The British Foreign Secretary, Lord Palmerston, decided that the time had
come for a settlement of Sino-British commercial relations. Arguing that,
in surrendering the opium, the British in Canton had been forced to
ransom their lives - though, in fact, their lives had never been in danger -
he demanded either a commercial treaty that would put trade relations on
a satisfactory footing, or the cession of a small island where the British
could live under their own flag free from threats.

An expeditionary force arrived in June 1840 to back these demands, and
thus began the so-called First Opium War (1840-42). Hostilities alternated
with negotiations until agreement was reached between Elliot and Qishan
(Keshen), the Manchu Commissioner who had replaced Lin after the latter
was exiled in disgrace over the preliminaries of a treaty.

Under the Convention of Chuenpi (Chuanbi) signed on January 20, 1841,
Hong Kong Island was ceded to Britain. A naval landing party hoisted the
British flag at Possession Point on January 26, 1841, and the island was
formally occupied. In June, Elliot began to sell plots of land and
settlement began.

Neither side accepted the Chuenpi terms. The cession of a part of China
aroused shame and anger among the Chinese, and the unfortunate Qishan
was ordered to Peking (Beijing) in chains. Palmerston was equally
dissatisfied with Hong Kong, which he contemptuously described as 'a
barren island with hardly a house upon it', and refused to accept it as the
island station that had been demanded as an alternative to a commercial
treaty.

'You have treated my instructions as if they were waste paper,'
Palmerston told Elliot in a magisterial rebuke, and replaced him. Elliot's
successor, Sir Henry Pottinger, arrived in August 1841 and conducted
hostilities with determination. A year later, after pushing up the Yangtze
River (Chang Jiang) and threatening to assault Nanking (Nanjing), he
brought the hostilities to an end by the Treaty of Nanking, signed on
August 29, 1842.

In the meantime, the Whig Government in England had fallen and, in
1841, the new Tory Foreign Secretary, Lord Aberdeen, issued revised
instructions to Pottinger, dropping the demand for an island. Pottinger,
who had returned to Hong Kong during the winter lull in the campaign,
was pleased with the progress of the new settlement and, in the Treaty
of Nanking, deviated from his instructions by demanding both a treaty
and an island, thus securing Hong Kong.

Five Chinese ports, including Canton, were also opened for trade. The
commercial treaty was embodied in the supplementary Treaty of the
Bogue (Humen) in October 1843, by which the Chinese were allowed
free access to Hong Kong Island for trading purposes.

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