The Rise of the Opium Trade
To understand the events that led to Prohibition, we must trace the origins of the opium trade. History will reveal that opium once supported the economies of several nations and that Britain in particular was responsible for the enslavement of millions of Chinese through their addiction to opium.
It’s hard to imagine that not one, but two wars were fought to force a sovereign nation to open its ports to accept opium. In one of the more shameful episodes of the British Empire, opium was used to balance their trade deficit with China - regardless of the human toll caused by their imports.
The Looting of China
China was wary of foreign influences on their culture and limited foreign merchants to a single port of trade in Canton. China’s rich store of natural resources allowed them to produce virtually everything they needed themselves. The Emperor did not want European goods in exchange for tea, porcelain, silks and spices that the English imported from China. The only form of trade that China would accept was silver; but because Britain operated on the gold standard, they had to buy silver on the open market at great expense. This created a trade imbalance that was heavily weighted toward the Chinese.
The British East India Company (EIC) found a novel way to balance the books. In 1761, the EIC held a monopoly on all the opium produced in India with the tacit approval of the Crown. All they required was a market for their product. The EIC bribed merchants in Canton to accept opium in exchange for the commodities they desired. (Opium was banned in China in 1726.) At first there was little interest in opium, but demand for the highly addictive drug grew exponentially in the coming years. By 1837, opium accounted for 57% of British imports.
After China raised the penalty for importing opium in 1796 to death, the EIC developed an elaborate trading scheme to smuggle the contraband drug into China in rapidly growing amounts. First tea was bought on credit in China, then the British auctioned opium to those merchants in Calcutta at a profit margin around 465%. The British kept the silver and the opium was shipped to China as payment for the tea. The opium was put on heavily armed cargo ships that anchored outside of Canton awaiting Chinese smugglers who offloaded the opium onto their junks and sailed it into port. Once the ship was clear of drugs, they could sail into port to trade for tea and spices and start the process agan.
Opium shipments were rarely confiscated because the “free traders” could afford to pay the customs officials better than the government could for doing their duty. Whenever the Central government issued a new edict to restrict opium, local officials would raise their fee to “look the other way.” The going rate was 80 taels of silver per chest of opium. (In this instance, a tael is 37.5 grams.)
The habit of smoking opium was introduced to China by Portuguese traders in the early 1700’s. Initially the practice was limited to the idle rich, but after the British flooded the country with cheap opium, the habit quickly spread until ninety percent of males under forty living near the coastal ports were addicted to opium. Business activity suffered and the quality of life in the community was adversely affected. A common laborer spent upwards of two-thirds of their income on opium leaving precious little for the necessities.
After Emperor Dao Guang’s three sons died from an opium overdose, he lambasted Britain as “a Christian nation devoid of four of the five Virtues.” The Celestial Empire responded by appointing Lin Ze-Xu as the first Commissioner of Opium in 1796.
Lin was known as a man of high moral values and he immediately set about ridding the country of its terrible addiction. In a great public show, Lin destroyed mountains of opium pipes in great bonfires. He arrested 1,700 Chinese drug dealers and demanded that Western merchants in Canton turn over their stores of opium. When the merchants refused, Ze-Xu blockaded their warehouse for one and a half months until they capitulated to his demands, eventually turning over 2.6 million pounds of processed opium. The haul was so large that it took 500 workers 23 days to destroy the entire stash.
Charles Elliot was the British Chief Superintendent of Trade in China at the time of the blockade. He persuaded the merchants to turn over their opium stores by promising the Crown would compensate them for their losses, something he was not authorized to do. The decision to go to war was largely based on the Crown’s unwillingness to honor his promise to reimburse the merchants' losses, estimated to be 2,000,000 pounds sterling - a virtual King’s ransom.
Turns out that opium profits were even more addictive than the poppy. Hiding behind indignation at China’s perceived insult to Britain’s “superiority,” Lord Palmerston, the Prime Minister, urged military intervention to force China to open its ports to “free trade” (opium).
Trying to find a reasonable justification for war, Palmerston stated, “Nobody could say that they honestly believed the motive of the Chinese government (to confiscate the opium) to have been the promotion of moral habits.” He maintained the war was being fought to stem China’s balance of trade deficit.
Records show that by 1839, China’s annual consumption of opium was valued at 100M taels compared to 40M taels that comprised the entire budget for the Imperial Court.
The Opium Wars
Tensions between China and Britain had escalated considerably when Lin published an open letter to Queen Victoria in 1839 questioning Britain’s moral reasoning to continue Her involvement in the opium trade. He wrote, “Your Majesty may not have been officially notified, and you may plead ignorance of our laws (death), but I now give you my assurance that we mean to cut this harmful drug forever."
The effrontery of this heathen country to make demands of The Crown was just too much for proud Englishmen to bear. Palmerston sent sixteen warships to exact revenge on China’s coastline. The Chinese put up a good defense, but they were overpowered by the superior British military who were well practiced at annihilating defenseless populations.
The terms of the Treaty of NanKing were harsh. China was made to repay the British merchants for the confiscated opium, four more ports were opened to British merchants, and HongKong was ceded to Queen Victoria. The supplemental Treaty of Bogue recognized Britain as equal to China (in China), and gave British subjects extraterritorial rights in treaty ports. This marked the start of China’s “Hundred Years of Humiliation.”
Opium addiction soon spread to other areas of China as more ports opened to trade with Westerners. Imports of opium rose from 15 tons in 1730 to over 75 tons in 1773.
When the British East India Company lost its monopoly on opium in 1832, the price plummeted as other merchants entered the market. The price drop was the cause of much concern for merchants who were accustomed to rising prices for their opium imports.
One of the largest opium importers of the day was Jardine-Matheson, a company still in existence today. A memo from their company directors revealed sinister motives for opposing legalization, “If the trade is ever legalized, it will cease to be profitable from that time. The more difficulties that attend it, the better for you and us.” They were right, the price soared after opium was made illegal through an international ban in 1914.
The Chinese authorities defied the terms of the Treaty by punishing merchants that traded with the British at the newly opened ports. England retaliated by offering friendly Chinese merchants the right to fly the British flag on their vessels believing this would give them protection from local officials.
That belief was shattered when a Chinese ship flying a British flag called “The Arrow” was seized by Cantonese officials in October, 1856 for alleged piracy. The British consul demanded the immediate release of the crew and an apology for the insult to the British flag. The crew was eventually released, but because the apology was withheld, the British governor in Hong Kong ordered warships to bombard Canton with approval from the Prime Minister.
Hostilities ended when the Chinese agreed to the terms of the Tientsin Treaty in 1858. The treaty required China to legalize opium imports, open more ports to foreign traders, allow missionaries into China’s interior, establish a British Maritime customs office, and allow foreign diplomats in Peking.
When the Chinese continued to resist admitting foreign diplomats into Peking, a second Opium War erupted. Combined Anglo-French forces were unopposed as they took the fort in Taku and advanced upriver. The Chinese asked for an armistice as the troops neared Peking and a delegation under Sir Harry Smith Parkes was sent to parley with the Chinese. Instead of negotiating, the Chinese seized the delegation. Members of the party were imprisoned and half of them died of torture.
As troops gathered outside the walls of Peking, the Chinese surrendered. They were forced to open ten more ports to British trade (opium), the Chinese were required to regulate the opium trade (rather than ban it), and the had to pay reparations of 3 million ounces of silver to England and 2 million ounces to France. The Old Summer Palace was burned in retribution of the treatment of the Parkes delegation.
British Treaty Causes Opium Imports to Soar
The new treaty ports allowed opium to spread throughout China. By 1830-31, the number of chests of opium brought into China increased fourfold to 18,956 chests. In 1836, the figure exceeded 30,000 chests. In financial terms, trade figures made available by both the British and Chinese governments showed that between 1829-1840, a total of 7 million silver dollars entered China, while 56 million silver dollars were sucked out by the soaring opium trade.
After the Indian Mutiny in 1878, the Royal Crown acquired the holdings of the British East India Company- including their lucrative opium trade - and nationalized their private army. It was largely a symbolic effort to show the world that Britian was officially out of the opium trade, but business not only continued as usual, it escalated, albeit the trade moved underground. Opium soon accounted for 57% of of all the commodities Britain imported into China.
Ironically, when Britain forced China to legalize opium imports, they cut into their own profits on the drug. A condition of legalization required British merchants to pay import duties, an overhead they did not have to absorb when the drug trade was illegal. The hunt was on to discover ways to increase profits. The answer came in the form of an international ban.
China's prestige as an advanced civilization started to decline the moment Europeans introduced opium to their country and then forced the drug on them in ever increasing amounts. To justify their wars, the British had to repackage the Chinese as inferior to Westerners which led directly to the first international ban on opium at the Hague Convention 1n 1914.
The Hague Convention marked the beginnings of prohibition in America also. Next week we will look at the devastating consequences on the lives of addicts when medical supervision is replaced with prohibition.
To understand the forces that led toProhibition, we have to examine the political landscape at the time. Three primary constituencies formed a voting block that was impossible to ignore. It consisted of the State Departments desire to normalize trade relations with China, the strong desire of Christian missionaries for access to China’s “heathen” populations, and doctors and pharmacists desire to eliminate the competition from patent medicines.