Jardine, Matheson & Co., later Jardine, Matheson & Co., Ltd., forerunner of today's Jardines, was a Far Eastern company founded in 1832 by Scotsmen William Jardine and James Matheson as senior partners. Trafficking opium in Asia, while also trading cotton, tea, silk and a variety of other goods, from its early beginnings in Canton (modern-day Guangzhou), in 1844 the firm established its head office in the new British colony of Hong Kong then proceeded to expand all along the China Coast.

By the end of the nineteenth century, Jardine, Matheson & Co. had become the largest of the foreign trading companies in the Far East and had expanded its activities into sectors including shipping, cotton mills and railway construction.

Further growth occurred in the early decades of the twentieth century with new cold storage, packing and brewing businesses while the firm also became the largest cotton spinner in Shanghai.

After the founding of the People's Republic of China on 1October 1949, doing business in the country became increasingly problematic. As a result, foreign businesses gradually withdrew from the mainland with Jardines leaving in 1954 to reconsolidate its business in Hong Kong. The firm would not return to mainland China until 1979, following the reform and opening up of the country.

Background The British and other nations had traded informally with China since the beginning of the seventeenth century. Chinese silk and tea gradually became popular in Britain, but imperial China had little need for British manufactured imports such as woollens. Concerned at what they saw as the encroachment of "barbarians" in their Celestial Kingdom, successive Chinese emperors issued numerous edicts restricting trade with foreigners under what was known as the Canton System. From the middle of the eighteenth century merchants were restricted to an area of Canton on the south China coast, where they were permitted to trade with a group of Chinese merchants known as the Cohong who operated from Thirteen Factories located on the banks of the Pearl River. One of the commodities that the Chinese merchants were interested in buying was opium – considered to have been "the world's most valuable single commodity trade of the nineteenth century". Trade in the drug was controlled by the East India Company, who had been granted a monopoly by the British crown in 1773 giving them sole access to the opium of Bengal although independent traders could still obtain supplies in Malwa, India. However, opium imports were banned in China as reaffirmed by a 1796 edict issued by the Jiaqing Emperor and the only way that the drug could enter the country was if it was smuggled in. At the time, opium was legal and considered relatively safe in the West. As a result, the trade hungry British Empire considered China's refusal to allow imports of the drug an affront to their principles of free trade espoused by Adam Smith and other leading thinkers of the day.

Early history

William Jardine was born in 1784 in the south west of Scotland and graduated from Edinburgh University with a degree in medicine. In 1803, at the age of 19, he became a surgeon on the ships of the British East India Company working the trading routes between London, China and India; a position he held for the next 14 years. As a senior ship's officer, Jardine was allocated an amount of cargo space equal to two chests which he could use to conduct his own business. Using this space, the doctor soon discovered that trading opium was more profitable than practicing medicine. It was during these early days that Jardine found himself on board a ship captured by the French with all its cargo seized. Despite this setback, a trading partnership formed at the time by Jardine with a fellow passenger, a Parsee Indian called Jamsetjee Jeejebhoy, would endure for many years.

In Canton, Jardine met a naturalised Briton of Huguenot extraction named Charles Magniac, brother of Hollingworth Magniac, both of whom would later partner with the Scotsman. Jardine learned that there were ways by which to a small extent the monopoly of the East India Company could be circumvented so in 1819 Jardine left his first employers and began the process of establishing his own private firm. In 1822, he set up in Canton as a free merchant and later, in 1828, joined the established firm of Magniac & Co,p. 20 which was the forerunner to Jardine Matheson & Co.

James Matheson was born in 1796 in the far north of mainland Scotland and also attended Edinburgh University. He began work in 1815 as a free merchant in Calcutta at his uncle's Agency House, Mackintosh & Co., trading goods and services between different markets and communities. One day his uncle entrusted him with a letter to be delivered to the captain of a soon-to-depart British vessel. Matheson forgot to deliver the missive and the vessel sailed without it. Incensed at his nephew's negligence, the uncle suggested that young James might be better off back in England. He took his uncle at his word and went to engage a passage back home. Instead, on the advice of an old sea captain, Matheson went to Canton. Here he became an independent merchant acting as agent for firms engaged in the rapidly expanding Indian export market. He then entered into a partnership, known as Yrissari & Co, which quickly became one of the five principal Agency Houses in China at the time, branching out into trade with many different countries. After Francis Xavier de Yrissari's death, Matheson wound up the firm's affairs and closed shop. Yrissari, leaving no heir, had willed all his shares in the firm to Matheson. This created the perfect opportunity for Matheson to join in commerce with Jardine. Matheson proved a perfect partner for Jardine. James Matheson and his nephew, Alexander Matheson, joined the firm Magniac and Co. in 1827, but their association was not officially advertised until 1 January 1828. Jardine was known as the planner, the tough negotiator and strategist of the firm and Matheson was known as the organisation man, who handled the firm's correspondence, and other complex articles including legal affairs. Matheson was known to be behind many of the company's innovative practices. The two men were a study in contrasts, Jardine being tall, lean and trim while Matheson was short and slightly portly. Matheson had the advantage of coming from a family with social and economic means, while Jardine came from a much more humble background. Jardine was tough, serious, detail-oriented and reserved while Matheson was creative, outspoken and jovial. Jardine was known to work long hours and was extremely business-minded, while Matheson enjoyed the arts and was known for his eloquence. William C. Hunter, a contemporary of Jardine who worked for the American firm Russell & Co., wrote of him, "He was a gentleman of great strength of character and of unbounded generosity." Hunter's description of Matheson was, "He was a gentleman of great suavity of manner and the impersonation of benevolence." But there were also similarities. Jardine and Matheson were second sons, possibly explaining their drive and character. Both men were hardworking, driven and single-minded in their pursuit of wealth.

The private firm of Jardine, Matheson & Co.

For a long time the East India Company had been growing increasingly unpopular in Britain because of its monopoly on Far Eastern trade. Following their independence in 1776, American merchants established a flourishing tea trade with China, leading many people to question the company's continued monopoly. Further, certain high-handed methods used by the East India Company in dealing with competitors aroused the moral indignation of the British at home while anybody that sought to enter the market and bring competition to the company was labelled a privateer – "a pirate" for which the penalty was "death without the benefit of clergy."

Occasionally, free traders did manage to secure a license from the company to engage in the "country trade," usually with India, but never with Britain. Other free traders, called "interlopers" who competed with the Company ran the risk of having their cargoes seized by the company's navy of armed Indiamen before they were hanged.

There was one method available by which a Briton could establish a business on the East India Company's preserves. He could accept the consulship of a foreign country and register under its laws. This method, first used by the Scot's born seaman John Reid, was employed by Jardine to establish himself in Canton. He followed in the footsteps of Magniac, who had obtained an appointment from the King of Prussia as Vice-Consul under his brother Charles, and became the Danish Consul. On this basis the partners had nothing to fear from the company and over time relations between the firm and the East India Company seemed to become amicable. It is recorded that when ships of the East India Company were detained outside the harbour by the authorities, Jardine offered his services "without fee or reward." These services saved the East India Company a considerable sum of money and earned Jardine the company's gratitude.

The earlier activities of Jardine, Matheson, Beale and Magniac made an important contribution to the 1834 termination of the East India Company's monopoly in ChinaUniversity of Cambridge Records of Social and Economic History New Series "China Trade and Empire: Jardine, Matheson & Co. and the Origins of British Rule in Hong Kong, 1827–1843" Alain le Pichon whereupon Jardine, Matheson & Co. took this opportunity to fill the vacuum left by the company's departure. That year the firm sent the first private shipments of "Jardines' Pickwick tea mixture", a blend of Chinese teas, from Whampoa aboard the firm's clipper Sarah bound for the docks of Glasgow, Falmouth, Hull and Liverpool, England. Jardine Matheson then began its transformation from a major commercial agent of the East India Company into the largest British trading hong, or firm, in Asia. William Jardine was now being referred to by the other traders as "taipan", a Chinese colloquial title meaning 'Great Manager'. In a thunderous tribute to Jardine, Matheson wrote, "I am sure none can be more zealous in your service." Jardine succeeded in capturing much of the East India Company's old market supported by its fleet of fast, elegant tea clippers that could out-sail most competitors to be the first to reach consumer markets. These included the Sylph, which set an unbroken speed record by sailing from Calcutta to Macao in 17 days, 17 hours. Jardines was also the first company to engage an official 'tea taster' in China to ensure they had a greater understanding of the different varieties of tea, thus enabling them to command the best prices.

Expansion In the early years of the 19th century both Jardine and Matheson went into partnership with Magniac, who subsequently retired to England in 1828. In 1832, two years before the East India Company lost its monopoly over British trade with China, the partnership was restructured as Jardine Matheson and Company with William Jardine, James Matheson, Alexander Matheson, Jardine's nephew Andrew Jardine, Matheson's nephew Hugh Matheson, John Abel Smith, Henry Wright and Hollingworth Magniac as its first partners. The firm later adopted the Chinese name "Ewo" (怡和洋行), meaning "Happy Harmony" and taken from the former well-regarded Ewo hong run by Howqua as one of Canton's Thirteen Factories. By 1830, the enemies of the East India Company had begun to triumph, and its hold on trade with the East had noticeably weakened with Jardine Matheson by then controlling around half of China's foreign trade.