The credit-ticket system was a form of emigration prevalent in the mid to late nineteenth century, in which brokers advanced the cost of the passage to workers and retained control over their services until they repaid their debt in full. It generally refers to the emigration of Chinese to California, but migrants to Hawaii, British Columbia, and Australia participated in a similar process. Controversy exists over whether or not the credit-ticket system was actually voluntary. The association of Chinese laborers with involuntary contract labor during a time in which it was illegal exacerbated the public’s anti-Asian sentiments. However, because of the lack of documentation regarding the credit-ticket system, it is difficult to prove whether or not Chinese laborers were truly free agents.

End of indentured servitude

Indentured servitude, once the dominant form of emigration to the United States, had largely disappeared by the start of the nineteenth century. First, improvements in the European labor markets increasingly allowed emigrants to pay their own way, and reduced the need to enter into indentured servitude contracts. Lower transport costs also made it easier for them to finance their own voyages, and decreased the cost of importing slaves. Indentured servitude fell out of favor as a form of European emigration as economic conditions in both Europe and the U.S. changed, and slavery

Slavery

Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...

 became the primary source of cheap and controllable labor.

Chinese migrants were motivated by the same economic conditions as early European indentured servants. The ratio of the cost of migration to the wealth of the migrants was high, so they had to find other methods of financing their passage. While this ratio dropped for European migrants in the nineteenth century, it remained high for Asian migrants. They also had incentives to emigrate because their projected earnings in the U.S. were much higher than those in China, especially due to the promise of riches in the California Gold Rush

California Gold Rush

The California Gold Rush began on January 24, 1848, when gold was found by James W. Marshall at Sutter's Mill in Coloma, California. The first to hear confirmed information of the gold rush were the people in Oregon, the Sandwich Islands , and Latin America, who were the first to start flocking to...

, which began in 1848. Coinciding with the increased supply of labor from Asia was an increased demand for labor in the U.S. By the early 1800s, indentured servitude had largely disappeared, and the Act Prohibiting Importation of Slaves

Act Prohibiting Importation of Slaves

The Act Prohibiting Importation of Slaves of 1807 is a United States federal law that stated, in accordance with the Constitution of the United States, that no new slaves were permitted to be imported into the United States. This act ended the legality of the U.S.-based transatlantic slave trade...

 of 1807 ended the arrival of new slaves from Africa. In addition, the construction of the transcontinental railroad

Transcontinental railroad

A transcontinental railroad is a contiguous network of railroad trackage that crosses a continental land mass with terminals at different oceans or continental borders. Such networks can be via the tracks of either a single railroad, or over those owned or controlled by multiple railway companies...

, which began in 1863, required a large but inexpensive labor force.

Differences from contract labor

Thus, while indentured servitude of Europeans decreased, they were replaced by new emigrants from Asia. Nineteenth century Chinese emigration to the U.S. consisted of two forms: the credit-ticket system and the contract labor system. During the 1850s, when contract labor was still legal, labor brokers in California imported workers with contracts of fixed duration. In February 1862, however, the federal government passed legislation against contract labor, specifically indentured coolie

Coolie

Historically, a coolie was a manual labourer or slave from Asia, particularly China, India, and the Phillipines during the 19th century and early 20th century...

 labor from China. Legislation in California, the Anti-Coolie Act

Anti-Coolie Act

In 1862 the California legislature passed An Act to Protect Free White Labor Against Competition with Chinese Coolie Labor, and [sic] to Discourage The Immigration of the Chinese into the State of California...

, followed in April of that same year. The Chinese Six Companies

Chinese Six Companies

The Chinese Consolidated Benevolent Association is a historical Chinese Association established in various parts of the United States with large populations of Chinese...

, the primary labor brokers in San Francisco, admitted to using contract labor, but claimed that they had stopped by 1853.

Consequently, Chinese emigrants arriving in California after 1862 under the credit-ticket system were not technically indentured, since they were not bound to their contract for a fixed number of years, but rather until they paid back their debt. Labor brokerage companies procured labor in China and advanced the cost of the voyage – about fifty dollars for the passage itself and twenty dollars for other expenses. Migrants repaid the debt in monthly installments, in addition to interest, after arriving in the U.S. Hence, in return for paying the initial seventy dollars, the brokers would receive about two hundred dollars from each emigrant. Unlike in indentured servitude, labor importers retained the costs of the debt themselves, and were not permitted to transfer labor contracts to employers.

Enforcement

Since contract labor was illegal, labor brokers had to rely on extralegal means to enforce the migrants’ repayment of their debt. Steamship companies made agreements with labor brokers that they would prohibit migrants from returning to China unless they presented proof that they had repaid their debt in full. In addition, the foremen who were responsible for distributing wages would enforce debt contracts by withholding some of the workers’ pay. The withheld wages would then be used to pay back the brokers. In addition to these methods, historian Gunther Barth

Gunther Barth

Gunther Paul Barth was an American historian. Barth joined the University of California, Berkeley faculty in 1962, and taught Western American and urban history until his retirement in 1995...

 argues that labor import companies also utilized intimidation and violence against the migrants and their families back in China in order to enforce debt repayment.

Controversy

There is considerable disagreement over the voluntary nature of the credit-ticket system. Although it differed from indentured servitude and contract labor, Barth and Sir W. Pember Reeves believe that it was still an involuntary form of emigration. Barth bases his argument around the assumption that coercion and physical violence were prevalent in the credit-ticket system. He calls the system a “thinly veiled slave trade.” However, David Galenson

David Galenson

David W. Galenson is a professor in the Department of Economics and the College at the University of Chicago, and a Research Associate of the National Bureau of Economic Research...

and Patricia Cloud present a different view in their analysis of Chinese immigration and contract labor in the late nineteenth century. They do not believe that there is enough evidence to back up Barth’s claims. Pointing to the lack of substantive documentation, they conclude that the assertions of previous historians have been exaggerated. They believe that, while the Chinese were not completely free agents, given that they were bound to debt contracts, the credit-ticket system was still largely voluntary.