Opium (18 page)

Confusingly, the edict did not mention a restriction on imports and importers. It was bungled, making illegal a substance which it was lawful to import. What was more, until 1796, opium imports were liable to an excise duty which illuminates the hypocrisy of the emperors who, whilst condemning their countrymen who dealt in opium, nevertheless earned from it for their exchequer.

The edict had little impact upon European traders who took scant notice. They simply reorganised their opium business and traded more stealthily. In the year of the edict, 200 chests of opium were imported, mainly for consumption in and around Canton, Macau and the Pearl River estuary. Little imported opium reached the interior of China. By 1767, however, imports had increased to 1000 chests per annum and 4000 by 1790, most of it landing at Lark's Bay near Macau, safe from both Portuguese and Chinese interference.

In 1796, all existing edicts were renewed and their penalties increased: then, in 1799, the Emperor Kia King issued a proclamation specifically prohibiting the importation of opium, its use in China and domestic poppy cultivation.

Before this, opium was regarded like any other commodity but from 1799 it became contraband. Invariably, as soon as it was illegal, organised smuggling commenced, the illicit trade conducted not by pirates but by surreptitious arrangement between importers and local Chinese officials: corruption, not nocturnal cutters and sloops, brought opium in to Canton and elsewhere along the coast. Attracted by substantial profits, other traders defied the East India Company licensing regulations and set themselves up in the opium and general trade markets. By 1800 there were twenty private firms of various nationalities operating in Canton.

Whereas the East India Company now had to compete with other merchants in China, in India it had come to hold a virtual monopoly over opium. The cultivation and domestic trade of opium in India had traditionally been a monopoly of the Great Mogul and local princes, but this had been gradually exacted from them by the East India Company after rivalry with the Dutch had been settled to their advantage. During the reign of Charles II, the company was given the right ‘to acquire territory, coin money, form alliances, make war and control civil and criminal jurisdiction.' In other words, it was more or less a state unto itself and, as the Mogul Empire began to break up in the eighteenth century, the company metamorphosed into a powerful political, as well as commercial, entity.

With the defeat of Siraj-ud-Dawlah at Plassey in 1757 by Robert Clive, the power of the Mogul Empire was shattered and Bengal came under the influence of the British. A few skirmishes occurred after this: in 1763, the British population of Patna was massacred but the uprising was quelled and the Nawab, the local puppet ruler, was dethroned. Clive was recalled from England to take control. As punishment, the Nawab lost all his possessions amongst which was the monopoly on opium production.

On his return, Clive's main task was to halt the corruption which had built up tension, culminating in the Patna massacre. He did this by setting the administration on a sure footing and paying decent salaries to its employees. To raise the revenue for this he taxed salt, tobacco and betel and levied a land tax. The East India Company in turn had to raise profits to fund Clive's reforms: opium was the ideal source.

In its early days, the company's opium trade had, for the best part, been conducted privately by its employees. Wages were so low they had been virtually dependent for their livelihoods on business conducted on the side. However, a decade after the Patna massacre, the Governor-General of the East India Company, Warren Hastings, took control of the opium monopoly, which he rightly saw as a very profitable source of revenue, although his first venture into opium was a failure. In 1781, he sent 3450 chests of opium to China in two ships one of which, an armed sloop called
Betsy,
was captured
en route
by a French privateer. Arriving off Macau, the captain of the surviving ship, the
Nonsuch,
received only derisory offers for his cargo and ended up selling it in Malacca at a considerable loss.

In India, the company attitude towards opium was restrictive. They controlled retailing by licence and under new rules introduced in 1793, all poppy growers had to sell their produce to the company. With a guaranteed market for output, opium cultivation soared. So, too, did the use of opium in India which rapidly habituated large numbers of native labour to such an extent it decreased their efficiency. In response to this, Warren Hastings unequivocally condemned its use, but he was faced with a dilemma. He was proscribing a major source of revenue. To overcome any potential fiscal loss, and to ease his conscience, he stated: ‘Opium is not a necessity of life but a pernicious article of luxury, which ought not to be permitted except for purposes of foreign commerce only, and which the wisdom of the Government should carefully restrain from internal consumption.'

In the light of such bare-faced hypocrisy, a decision was made to restrict domestic Indian consumption but to develop an export trade. The company, therefore, resolved to expand considerably the sale of opium to China, for not only was opium a superb trading commodity, in that it did not deteriorate, but demand increased as addicts were created.

Had they only known, the Chinese might have had an opportunity to stop the East India Company's opium trading at this early stage. In 1793, Lord Macartney went on the first British diplomatic mission to Peking to meet the emperor. Macartney carried a letter from George III to the emperor, along with extensive gifts chosen to represent the best Britain had to offer China. In his brief, Macartney was free to make concessions, one paragraph going so far as to concede the East India Company would, if necessary, prohibit the export of opium to China. Yet the matter was not discussed, the mission being a failure because Macartney refused to kow-tow and the Chinese dismissed his gifts as rubbish.

The growth of the opium trade with China also hinged on another addiction, albeit a far less pernicious one. It was tea.

The British had taken to drinking tea and Chinese tea, considered the best, was consumed in enormous quantities: with silk, it was China's primary export. The Chinese, however, whilst keen to export tea, really wanted nothing in return except silver bullion. As the Emperor Ch'ien Lung expressed it: ‘The Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There is therefore no need to import manufactures of outside barbarians in exchange for our products.'

This placed Britain and the East India Company at a serious trading disadvantage. They had to pay for tea cargoes in cash which had to come from its Indian accounts, with the result a balance of payments deficit soon accrued, much to the alarm of Parliament in London. The company had to reassess its operations or lose its charter. It took little effort to realise the commodities which could turn the situation around. Both were produced in India, where the company held such sway. They were cotton and, especially, opium. With a characteristic efficiency, the company promoted this trade with such success that, by 1804, the balance of trade was reversed and the outflow of silver halted.

The East India Company had the business methodically organised. Opium production was controlled in and around Patna, followed by the possession of the Malwa crop which brought about the end of Portuguese influence. Goa became a backwater, the East India Company attaining the opium monopoly over essentially the entire subcontinent. Some opium was also exported to China from Turkey, primarily by American merchants. The first American involvement in the trade was to be in 1811 when a Philadelphia brig, the
Sylph,
commanded by Captain Dobell, arrived in Macau with opium from Smyrna. Six years later, American traders purchased $500,000 in Turkish opium, which they also shipped to Macau, but their Middle Eastern product was inferior and unsuited to smoking: the East India Company virtually owned a world monopoly on good-quality product.

However, after the prohibitive imperial edict of 1799, in order to avoid detection, the opium-carrying ships were frequently disguised, flew flags of convenience, were armed and carried a detachment of soldiers. Opium being contraband meant no duty was levied on it, but it could no longer be landed at the factories from Whampoa. An opium depot existed on two ships permanently stationed just outside Macau harbour whilst, later, a large receiving vessel (also known as a warehouse ship) was anchored on the outskirts of Whampoa where it remained, gradually releasing its cargo, which was replenished annually, onto the market.

It was easy to smuggle opium ashore from the receiving vessels. The importer obtained payment on the spot, the opium being immediately taken ashore in armed boats with crews of fifty to seventy men, the Chinese buyer making the necessary arrangements with officials, bribing them to turn a blind eye to his business. The bribes were ironically known in the trader's vernacular as ‘tea money' (also called ‘squeeze'), still a common euphemism for a kickback in Hong Kong. Traders, almost but not all of them British, also paid tea money as a matter of course.

Pejorative reports about opium smuggling reached the East India Company directors in London who condemned it as ‘being beneath the Company to be engaged in such a clandestine trade.' They added ‘whatever opium might be in demand by the Chinese, the quantity would readily find its way thither without the Company being exposed to the disgrace of being engaged in an illicit commerce.' Nevertheless, they continued opium production and although they now prohibited their own vessels from carrying it, they encouraged other British captains, sailing under company licence, to take opium cargoes.

Under this policy of business by proxy, the opium trade grew. Merchants and sea captains were not reluctant to agree to the company's terms. Known as ‘country firms', ‘country merchants' or ‘country wallahs' (a name given to those who traded between India and other places in the East), they were private companies or individuals who acted as middlemen to handle trade with China, willing to assume the risk of transporting and selling opium. This transference of trading responsibility had two benefits. Indian revenue from opium continued and the East India Company continued to make a profit but it could claim ignorance of what was done with its product.

The system worked thus: the East India Company produced opium under monopoly and sold the chests at auction in Calcutta. Private buyers shipped the chests to China in country firm vessels. In Whampoa or Macau, agency houses received and sold them, with the Chinese purchasers smuggling the opium into China. They paid for it in silver bullion or coin which the agencies paid into the company's Chinese office in return for bills of exchange payable at banks in India or London.

Profits varied greatly. Opium was a highly speculative trade where great fortunes were possible but so also were substantial losses. Jardine Matheson became by far the largest agency, coming into being when William Jardine and James Matheson, both leading country merchants, joined forces in 1828: their partnership, which for the first years dealt primarily in opium, was formally registered as Jardine Matheson & Co. in 1832. In Jardine's opinion, the opium trade was the ‘safest and most gentleman-like speculation I am aware of.' The company exists to this day as one of the foremost trading multinationals in South-east Asia. It is the original ‘noble' house although, bearing in mind its foundations,
ignoble
might be a more apposite epithet.

Both Jardine and Matheson made massive fortunes out of opium. Jardine, whom the Chinese called ‘Iron-headed Old Rat' because he had once refused to run from a beating at the gates of Canton when trying to present a petition, returned to Britain, had a seat in Parliament provided for him but died of a lingering and agonising illness in 1843, substantiating for some the superstition that those who dealt in opium would come to a sticky end. A contemporary view of Jardine's political opportunism exists in Disraeli's novel,
Sybil:

‘You had a formidable opponent, Lord Marney told me,' said Sir Vavasour, ‘who was he?'

‘Oh, a dreadful man! A scotchman, richer than Croesus, one Mr Druggy, fresh from Canton, with a million in opium in each pocket, denouncing corruption and bellowing free-trade.'

James Matheson lived much longer, dying aged ninety-one in 1887 after building himself a castle, also becoming an MP and endowing the professorship of Chinese at the University of London. His nephew, Donald, who became his partner in Jardine Matheson, clearly did not agree with Jardine's gentlemanly premise. He was a serious man whose conscience was pricked by the opium trade. Eventually, he became so sickened by the business he resigned from the company in 1848: later, as an old man, he was appointed a chairman of the Society for the Suppression of the Opium Trade in Britain.

After the edict of 1799, the illicit opium trade continued for another seventy-eight years with the full knowledge and tacit approval of the British government of which, because it was governed by a charter, the East India Company was never fully independent. The charter was frequently revamped with various parliamentary committees periodically inspecting the company's activities, profitability and viability: its social or moral standing was never questioned.

In 1830, with the expansion of the trade, permission was granted from London to extend the poppy cultivation in India, ‘with a view to a large increase in the supply of opium.' This raised output by the middle of the decade to over 30,000 chests per annum. An indication of the government's knowledge of the opium trade can be seen from a report of 1832 which stated: ‘The monopoly of opium in Bengal supplies the Government with a revenue amounting in sterling money to £981,293 per annum … it does not appear advisable to abandon so important a source of revenue.' And important it certainly was for that year's opium crop formed a sixth of the gross national product of British India.