Russell & Company () was the largest American trading house of the 19th century in China. It specialised in the trade of tea, silk, and opium, and was later involved in the maritime transport.
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. 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. 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.
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. 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.
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. 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.
In August 1829, Thomas T. Forbes 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. 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.
Structure The founding structure of Russell & Company was driven by driving American-Chinese commercialist groups at the beginning of the 19th century. The founder and main proprietor of Russell & Company, Samuel Russell, was originally a resident of Middletown, Connecticut, before establishing a contract with commercial agents and Providence merchants Cyrus Butler, Benjamin and Thomas Hoppin and Edward Carrington, who had previously served as American consul within China. According to the terms of the agreement, the providence merchants and the contractor (Samuel Russell) formed "a connexion in business at Canton in China, under the name of firm of Samuel Russell & Co. for the term of five years."
The early structure of the company was characterised as a contract arrangement, where Samuel Russell resided in Canton within the established trade house. The company was formed in first by the input of $20 000 USD in capital, arranged in conjunction between the contracting providence merchants (Butler, the Hoppin brothers and Carrington). Russell was not required to input capital; his responsibilities were to reside in the branch house in Canton and devote his time to the strict management of the trade house’s business. The merchants and Carrington were tasked with exerting their influence and capabilities in order to draw consignments and commercial growth toward the house. The main trading house was simple in framework. It consisted of a security merchant and various other employed traders who were responsible for market communication, accounting and the direct sale of goods. The commercial house was officially constructed in 1819 under the Company.
Commercial Origins The late nineteenth century saw a Chinese commercial culture that had become increasingly integrated with the market economy system of America. The century, especially the first half, was characterized by incessant growth in the American market, leading from socio-economic factors which included surges in industrial productivity and hence economic output. This economic trend was coupled an insurgency of fading protectionism within United States foreign policy, meaning that American commercialism and the rise of companies such as ‘Russell & Company”, were underpinned also by a national goal of economic expansion into Asian markets.Hughes, Sarah Forbes, ed. Letters and Recollections of John Murray Forbes. 2 vols. Boston: Houghton, Mifflin & Co. 1899; Reprint, New York: Arno Press, 1981
Russell & Company’s ability to quickly adapt to resource and supply demand within a bustling Chinese market acted as a hallmark of American foreign policy at the time toward new internationalised businesses. American foreign policy and trade were heavily intertwined in the first half of the century, as America sought to champion an international role that practiced free trade and that took advantage of open markets and un-capitalised demand. As a new country, the founding fathers were heavily focussed on an international economy, wherein America could utilise ambition in overseas markets in order to help drive and establish prosperity, wealth and interdependence within the domestic sphere of the nation.Bruner, Katherine F., John K. Fairbank, and Richard J. Smith, eds. Entering China's Service: Robert Hart's Journals, 1854-1863. Cambridge, Mass.: Council on East Asian Studies, Harvard University, 1986; distributed by Harvard University Press.
This early advocacy for open trade in Sino markets is reciprocated in the American government’s endorsement of Russell & Company. Russell & Company, although commercially independent, stood as a representative pillar of a governmental aim to increase trade and development in an imperialistic and relatively under-developed modern market within Shanghai
Expansion Before the middle of the century Russell & Company were relatively under-developed and served as a commission house in the trade and sale of basic items. However, the company soon began to maintain a leading position within Chinese-American trade from 1844, following the growing commercial presence of United States merchants within Canton. The trading house was the first firm to be established in Shanghai. Soon after such expansion, the company set up a further agency in Fuzhow, and following this established a branch in Hong Kong two years later. Between the years of 1861 and 1864, Russell & Company expanded through coastal areas of China, establishing branches or agencies in areas such as Ningbo, Hankou, Zhenjiang and Tianjin.
In addition to this, the company soon moved from coastal areas to establish branches within interior areas of China, including regional areas. The company ran subsidiary enterprises; including a steam-ship company and a silk processing plant. Later branches would also sell insurance and deal in foreign exchange for overseas merchants and businesses. In 1849 the company amassed a capital profit of $220 000 USD which increased by $50 000USD into the period of 1860. These returns more than doubled some of Russell & Company’s closest competitors, including Augustine Head & co.
1820s–1840s Following the acquisition of Perkins & Co. in 1829, Russell and Co. inherited Cushing's extensive opium trading connections from across the globe. Their illegal trade at that time in Turkish opium via the island of Lintin in the Pearl River estuary was particularly lucrative. 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. 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. 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.
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. From 1834 to 1836, 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. By the early 1840s, Russell & Co. had become the largest American trading house in China and maintained that position for decades.
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 to 1864, the company established multiple branches in Ningbo, Tianjin, Zhenjiang and Hankou. Briton Nichol Latimer (who was the publisher of the North China Herald which was the most influential newspaper in China) was the manager of Russell & Company's Shanghai Steam Navigation Co. until his death in 1865.