“And they ask for the payment in silver,” guessed Charlotte.
Sheffield’s eyes widened. “Supply and demand! I’ll wager they were able to demand a great deal of silver for their opium, due to its scarcity.”
“Correct. You see, Mr. Sheffield, you have a very good head for business,” said Cordelia. “They were, in effect, getting the silver at a very cheap price.”
Sheffield again jumped in. “So I would guess they took the silver, used it to buy tea from the emperor’s consortium, and brought the tea back to England, presumably using false accounts to make it all seem like legitimate East India Company business. And thereby they would make another healthy profit.”
“Exactly,” answered Cordelia, with an approving nod. “However, the dastards soon saw a way to improve on their scheme.” She turned to the dowager. “To cut out the risk of shipping it back, they sold the tea to another foreign merchant—”
“Wait! I thought you said the Chinese controlled the trade in tea very strictly,” protested Alison.
“They do. But all the foreign merchants are confined to a certain enclave at any Chinese port open to international trade. Canton, on the Pearl River, is the principle site used by foreigners. Within these enclaves are ‘factories,’ which is what the offices and the mercantile agents—”
“Actually, the mercantile agents are called ‘supercargoes,’ ordabanin Chinese,” interrupted Sheffield. When Cordelia raised her brows in surprise, he added, “As our company is planning to trade with China, I’ve been doing research on the subject.”
She gave a small nod. “It is these supercargoes who help facilitate all the financial transactions. Once the official business with the Chinese officials is completed and the tea is moved to the export area, there are side deals to be made.”
“On which, I assume, the Chinese choose to turn a blind eye,” said the earl.
“A smart move,” mused Sheffield. “Much better to leave it to the supercargoes, with their established trade routes and network of bribable officials, to disguise all this as a part of their legitimate trade.”
“Yes, but then the laws of economics took over,” Cordelia continued. “The emperor began demanding more and more silver for his tea. And it appears, based on what Jamie overheard a loose-lipped assistant to the Cobra say, that the conspirators began to worry, as they were paying out more and more bribes to men with whom it was dangerous to diddle.”
“Whatever did they do then?” Sheffield asked.
“To make a long story short, they got out of the tea business, trading only enough to appear to be a legitimate trading operation,” said Cordelia. “Instead, they concentrated on accumulating their silver.”
“I think I can see where this is going,” Wrexford interjected. “Because the silver was traded in the black market for opium, and because of the emperor’s demands for payment in silver, the conspirators were accumulating silver at a much cheaper price than existed in the European markets.”
“Yes, exactly, milord,” Cordelia responded. “The dastards came to realize that the true potential source of profit was their ability to get cheap silver in China, since it had a much greater value in Europe.”
Alison squinted in confusion. “So they began to trade in silver?”
“Well, for a time, yes,” Cordelia responded. “But once again, the laws of market economics took over. They originally tried to have their partners—the supercargoes—bring the silver back to London to resell it at the higher price. But that, too, posed problems. The price of silver in Europe can be volatile, and this was a concern given the time it took to transport it back from China. In one of their earliest efforts, by the time they got the silver back to Europe, the price had dropped. That, plus all the bribes they had to pay to customs officials and co-conspirators within the Company for camouflaging the payments through East India Company accounts, meant they actually lost money on their trading.”
“Shouldn’t that have put an end to their machinations?” asked Alison.
Cordelia shook her head. “Alas, no. They are, as I said, very astute financially. They began to solve this last set of problems with bills of exchange.”
“Bills of what?” exclaimed Alison. “Forgive me . . . but I thought they were exchanging opium and tea and silver.”
“Bills of exchange have long been a common practice in the world of commerce,” explained Cordelia, “They began in the Middle Ages, and are now becoming even more prevalent as trade expands around the globe.”
“Ah! I’ve been studying these instruments, too!” Sheffield’s face lit up. “They take a variety of forms. But I would think that what they did here was pay the opium suppliers in India with a bill of exchange, rather than cash in the form of either British pounds or the local Indian currency. Because of their international operations, the supercargoes had agents in most major cities along the trade routes. I won’t go into the habble-babble about how the pieces of paper travel around the world and get converted back into actual currency by the billholders, but the system works.”
“An excellent summary,” said Cordelia approvingly. “There are a few other details, because of the various currencies involved and a few other technical aspects, but your description is bang on the mark.”
Sheffield flashed a smile, but then his expression turned perplexed. “There’s still one basic element that puzzles me. Didn’t the supercargoes then have the same problem of bringing the silver back to Europe, with the same risks of fluctuations in the price of silver and of detection? After all, the conspirators still had to sell the silver in Europe to pay off the bills of exchange they had issued to their Indian suppliers.”
“You’re right, Mr. Sheffield. I’m just about to get to that part,” said Cordelia.
* * *
“Perhaps we should order more tea before you begin,” suggested Alison. Despite the warmth of the afternoon, Cordelia’s words seemed to have caused a chill to settle over the room.
Feeling her head begin to throb, Charlotte pressed her fingertips to her temples. The case had unsettled her from the start, and she had a sense it was about to take an even darker turn.
The previous year she had done several satirical drawings that focused on a certain incident involving the East India Company. Her usual informants had been too terrified to talk to her, and though she had managed to cobble together enough facts to make a commentary, she had come away with the sense that the Company was utterly ruthless in protecting its reputation.
