Russell & Company

Russell & Company (Chinese: 旗昌洋行; pinyin: Qíchāng Yángháng) was the largest American trading house of the mid-19th century in China. The firm specialised in trading tea, silk and opium and was eventually involved in the shipping trade.

Foundation[]

In 1818, Samuel Russell was approached by Providence merchants Edward C. Carrington, Cyrus Butler and Benjamin and Thomas Hoppin to be an employee of their new resident commission firm in Canton (now referred to as Guangzhou) under the name of Samuel Russell & Company.^[1] The contract would expire after five years and the profit accumulated would be split between all parties. Russell arrived in Canton in 1819 and established Samuel Russell & Co.^[1] By 1820 the company was experiencing financial difficulties as a result of an economic depression, the Panic of 1819, which lasted until the mid-1820s.^[1][2] Due to these circumstances, Butler and Carrington left Samuel Russell & Co. in 1823 whilst the Hoppin brothers and Russell continued to do business in Canton. After the five-year contract expired in January 1824, Russell entered into a partnership with factory owner and former agent of Brown & Ives, Phillip Ammidon, to establish Russell & Company.^[3] Russell and Company’s ventures into the opium trade began shortly after with Ammidon who set sail for India with the intention to deal in Indian opium.^[4]

Beginnings[]

In its first year of operating, the company worked exclusively as a commission firm for China and America with either Russell or Ammidon traveling elsewhere to increase their connections.^[3] The two partners would spend two years in different locations with one of them residing in Canton and in 1827, instead of replacing Russell at his post at their main headquarters, Ammidon returned to the United States from his ventures in India and contracted William H. Low and Augustine Heard to relieve him of his duties. In 1830, Russell began a three-way partnership with Low and Heard excluding Ammidon from the new contract and forced him to resign from the company.^[1]  

In August of 1829, Thomas F. Cushing died in a typhoon near Macao leaving the position of resident partner Perkins & Co. vacant. Prior to his death, Forbes had written in a letter that Russell was to replace him if complications were to arise and John Perkins Cushing, who was Forbes’s cousin and also the founder of Perkins & Company, accepted these conditions which lead to the decision to merge Perkins & Company and Russell & Company.^[4] Heard was appointed by Cushing to be a partner of the newly combined commission firm to manage the Perkins ships and Forbes’s younger brother, John Murray Forbes would replace Heard’s position as a clerk at Russell & Company. Russell and Cushing left Canton for Boston in August 1831, leaving the management of Russell & Co. to Heard and Low.^[5]

Expansion[]

1820s–1840s[]

Following the acquisition of Perkins & Co. in 1829, Russell and Co. inherited Cushing’s extensive opium trading connections from across the globe.^[1] Their illegal trade at that time in Turkish opium via the island of Lintin in the Pearl River estuary was particularly lucrative.^[6] In 1831, son of theatre actors William B. Wood and Juliana Wood, William W. Wood was employed by Russell & Co. to be Low's secretary in February before leaving the company in July.^[7] Joseph Coolidge was then hired as a clerk to increase interest in trading opium in Parsee and Calcutta while Low was forced to leave in 1833.^[4] John C. Green was brought in as the new head of the firm and agent after Heard left Russell & Co. in January of the following year. In the same year, the East India Company's monopoly on the British China Trade came to an end and Russell & Co. entered into an unofficial partnership with two British firms, Jardine, Matheson, & Co. and Whiteman & Co., to further expand the opium trade in India.^[7]

Under Green's leadership, the firm underwent major changes to offset the influx of commissions and increase in workload, after a clerk, William C. Hunter fell ill and was not able to return until March 1833 and John M. Forbes was advised to set sail for America by his doctors. Forbes would only return in 1835 to find that he was contracted as a partner of Russell & Co. since the beginning of the year, an offer which he accepted. In 1836 Russell's nephew, Abiel A. Low, became a partner despite only having three years of experience as a clerk at Russell & Co., while Hunter was only given a share of Russell & Co. once Green relinquished one-sixteenth of his shares.^[3] From 1834-36, the company saw a net profit of over $400,000 with an average of approximately $133,000 per year.

With Green announcing his retirement in 1838 and the expiration of their partnership in the beginning of 1840, John Forbes formed a new partnership with Robert B. Forbes and Warren Delano Jr. in 1839. In 1842, John Forbes made an attempt to hire his cousin Paul S. Forbes, a decision that was vetoed by the other partners until 1846 when Paul S. Forbes took over Robert Forbes's position as a partner of the firm.^[1] By the early 1840s, Russell & Co. had become the largest American trading house in China and maintained that position for decades.^[6]

Shanghai Steam Navigation Company (1846–1877)[]

In August 1846, W.P Peirce opened a branch in Shanghai and by 1852 the main headquarters of Russell & Co. was moved from Canton to Shanghai. To further expand their operations in the tea trade, a firm was set up in Fuzhou in 1853 and a branch was formed in Hong Kong in 1855. From 1861-64, the company established multiple branches in Ningbo, Tianjin, Zhenjiang and Hankou.^[1] Briton Nichol Latimer, resident of Shanghai and the publisher of the North China Herald, the most influential British newspaper in China, was the manager of Russell & Company’s Shanghai Steam Navigation Co. until his death in 1865.^[8][9]

Russell & Co. debuted a subsidiary, Shanghai Steam Navigation Company (Shanghai S. N. Co.), under the guidance of partner Edward Cunningham in 1862. They began operations with 5 steamships which eventually expanded to 18 steamships by the 1870s. For the next 15 years, Shanghai S. N. Co. would average 12% in profit with their best year seeing a 50% return.^[1] With $1.35 million in initial capital, Shanghai S. N. Co. became the largest joint-stock company in China losing the title in 1865 to the Hong Kong and Shanghai Bank, to which they took second place.^[10] In 1866-67, Russell & Co. came to a quid pro quo agreement with competitors Jardines, Dent & Co., who owned Hong Kong, Canton & Macao Steamboat Company (HCMSB), and Augustine Heard & Co., where the former would abstain from trading on the Canton River and the latter would no longer trade on the Yangtze River.^[10] By February of 1967, Shanghai S. N. Co. had arranged plans to purchase rival steamships that were operating on the Yangtze River. From then on SSNC would hold a monopoly on the river and two coastal routes, Shanghai and Ningpo and Shanghai and Tientsin.^[11] This monoply was disrupted in 1871 with the arrival of China Navigation Co. Ltd (CNC) and China Coast Steam Navigation Co. (CCSNC), both founded by prominent British firms John Swire & Sons and Jardine, Matheson & Co., respectively.^[10]

Steamships owned by Shanghai S. N. Co.^[10][]

Name	Active Period	hideLocation (under the ownership of Shanghai S. N. Co)
Surprise (惊异)	1861–1862	Yangtze River
Kiangse (Kiangsu)	1861–1877	Shanghai
Pembroke	1862–1865	Shanghai Yangtze River
Huquang (Ou-Guang)	1862–1866	Yangtze River
Chekiang	1862–1864	Yangtse River Hankow
Shanse	1862–1877	Shanghai Shanghai-Tientsin route Yangtze
Szecheun	1862–1875	Ningpo Shanghai-Tientsin route Yangtze River Shanghai
Tsatlee	1862–1877	Shanghai-Woosung
Fohkien	1863–1865	Hong Kong-Shanghai
Moyune	1865–1873	Shanghai Hong Kong Yangtze River
Fire Queen	1865–1877	Yangtze River
Kiukiang	1865–1866	Hong Kong-Canton
Poyang	1865–1866	Hong Kong-Macao
Fusiyama	1866–1877	N/A
Hirado	1866–1877	N/A
Plymouth Rock	1866–1877	Hong Kong-Canton Yangtze River
Kiang Loong	1867–1873	Yangtze River

Decline[]

In the 1860s, the China trade underwent a series of transformation which was the result of more competition from their British rivals and the shortened length of time that was needed to commute to locations with the opening of the Suez Canal in 1869. By the 1870s, Russell & Co. were forced to seize their banking operations as the lucrative importing of precious metals were eventually overtaken by newer commission firms and professional banks. Initially, Shanghai S. N. Co. was established to counter their losses, however their rates of return would continue to decrease and in 1877 they were acquired by the China Merchants Steam Navigation Company alongside their waterfront properties.^[1] Facing further financial difficulties, the company devolved into Shewan & Company in 1891.^[6]

Competitors[]

Russell, Sturgis & Company[]

Russell Sturgis & Co. was established in 1834 as a branch of a Manila commission firm Russell & Sturgis under the guidance of Cushing. The founder, George R. Russell (no relation to Samuel Russell) was the nephew of Ammidon.^[4] The similarities in naming became important to note for the partners of Russell & Co. though Russell, Sturgis & Co. would never address it. By 1840, the firm was acquired by Russell & Co.^[1]

Augustine Heard & Company[]

Heard and Coolidge formed a rival merchant house Augustine Heard & Co. in 1840 after there were disagreements between the partners of Russell & Company. The firm was managed mainly by Heard’s nephews and had branch offices in Shanghai and Hong Kong.^[12]

Olyphant & Company[]

Olyphant & Co. was formed by Protestant missionary, D.W.C Olyphant, in the early 1810s who opposed the opium trade on moral grounds as a result of his Christian principles. John M. Forbes wrote in a memo to Heard that he should remain “on [his] guard” due to Olyphant’s vocal disavowal of their practices.^[5]

Jardine, Matheson & Company[]

Founded in July 1832 by Scots William Jardine and James Matheson, the commission firm dealt heavily in opium and had inherited connections in India from merchant John R. Latimer, who had refused to work for Russell & Co. prior to announcing his retirement.^[4] It's steamship subsidiary CCSNC became a direct competitor of Shanghai S. N. Co and would later be known as Jardine Matheson & Co. Ltd.^[13]

Butterfield & Swire[]

Owner of a London-based commission firm, John Swire & Sons, John S. Swire collaborated with wool manufacturer, Robert S. Butterfield to establish a Chinese firm, Butterfield & Swire, in 1866, after a brief trip to Shanghai.^[14] Much like Russell & Co., Butterfield & Swire was a commission firm concerned mostly with merchandise in its first few years of operation before establishing their shipping branch, CNC. Swire once wrote that "the Shanghai S. N. Co.'s shares would never have seen a premium," citing this as the reason for entering the Yangtze steamship trade, a prospect he had expressed interest in as early as 1867.^[11]

Notable people of Russell & Company[]

Partners[]

(chronologically)

• Robert Bennet Forbes (1804–1889) was the head of Russell and Company.
• John Murray Forbes (1813–1898), brother of R B. Forbes and the great-granduncle of 2004 presidential candidate John Forbes Kerry.
• William Henry Low, senior partner of the firm.
• Augustine Heard, who later founded Augustine Heard & Company, a large trading house in China.
• John Cleve Green (1800–1875) Philanthropist - benefactor of Princeton University.
• Abiel Abbot Low, William H Low's nephew, founder of trading company A. A. Low & Brothers, served as a partner.
• Russell Sturgis, who later became head of Baring Brothers in London.
• George Tyson, in the 1850s in Hong Kong^[15]
• Warren Delano Jr., the grandfather of Franklin Roosevelt (32nd President of the United States), in the 1860s, having first joined in 1833 and served as the Chief of Operations of Russell & Company in Canton.^[6]
• William Howell Forbes, R B Forbes' nephew, head partner in 1884.^[6]

Officers[]

• Nichol Latimer, publisher of North China Herald and founder of Nichol Latimer and Co.. Latimer was manager of Russell & Company’s Shanghai Steam Navigation Co. until 1865.

References[]

External links[]

• Russell & Company Records at Baker Library Historical Collections, Harvard Business School