Smith, Greg dot com

It was not the British Empire's finest hour. After establishing the opium trade in China in an elegant, if nefarious, international trading scheme the British fought a war against the Chinese government to expand their market, creating millions of Chinese addicts.

I'm in Shanghai this week. Today it's one of the world's busiest and most high-tech cities. But by some reports -- perhaps exaggerated, but who knows -- something like 90% of the male citizens were opium addicts, lying in a stupor in opium dens like in this photograph from Shanghai in 1906:

During the 17th and 18th centuries Britain developed a massive balance of trade/trade deficit problem with China. British ships would return from China full of tea, silk and porcelain. To balance the trade they should have been able to take British produced goods back to China. But the Chinese government at the time, the Qing Dynasty, placed extremely high taxes and restrictions on British manufactured goods. The only thing that they would take was hard silver (ingots, not currency).

Britian didn't have enough silver to pay for all tea, silk and porcelain they wanted. So they had to buy it with their gold-back currency from other Europeans. Therefore the price of silver went up in Europe and as a result the cost of Chinese products bought with that silver rose as well. It was an inflationary spiral. In a nutshell: the British were bankrupting themselves because they had no commodity that the Chinese wanted to trade for.

Throw in one other wrinkle: the British wanted to sell their manufactured goods in India, but India didn't have anything that the British needed enough to balance that trade. Their products were selling for too little there unless they could find a more valuable commodity in India to exchange them for.

Adversity breeds ingenuity, so eventually someone came up with what seemed like a pretty neat idea. The British colony in India would grow opium to sell to the Chinese. The system was elegant: British ships would sale to India full of manufactured goods (employing Englishmen back home), unload and reload with opium, sale on to China where they would trade the opium for tea, silk and porcelain, then sail home to complete the cycle. Balance of trade restored -- maybe even better than that, the British were actually making a profit instead of sending all their money out of the country.

And so the British East India company began selling really large quantities of opium to China. Between 1730 and 1800 British imports of opium into China's southern ports -- often using Chinese intermediary ships and smugglers -- skyrocketed. The Chinese government was alarmed: it was well aware of the destructive consequences of creating millions of opium addicts in their society. Repeatedly the Qing government in Beijing -- far to the north -- tried to ban the import and sale of opium but lacked the power to enforce it. In 1810 Qing government issued the following decree:

Opium has a harm. Opium is a poison, undermining our good customs and morality. Its use is prohibited by law. Now the commoner, Yang, dares to bring it into the Forbidden City. Indeed, he flouts the law! However, recently the purchasers, eaters, and consumers of opium have become numerous. Deceitful merchants buy and sell it to gain profit... If we confine our search for opium to the seaports, we fear the search will not be sufficiently thorough. We should also order the general commandant of the police and police- censors... If they capture any violators, they should immediately punish them and should destroy the opium at once. As to Kwangtung and Fukien, the provinces from which opium comes, we order their viceroys, governors, and superintendents of the maritime customs to conduct a thorough search for opium, and cut off its supply.

Despite these intentions the Qing government was too weak and too far away from the Southern ports to shut down the opium trade. By 1838 the British East India Company was importing 1,400 tons of opium from India to China annually. Opium addiction was consuming Chinese society. The government had to act.

In 1839 the Chinese government imposed the death penalty on opium dealers and smugglers and forced British merchants to sign documents promising not to trade in opium or face consequences. They even sent a letter to Queen Victoria, asking her to explain the moral reasoning for Great Britain smuggling this corrosive drug into China and warning that the Chinese government meant to take any steps necessary to stop the import of opium. It is believed that British officials never passed the letter on to the Queen.

In 1839 the Chinese government seized large quantities of opium from traders in Canton and destroyed it (they put it into a specially dug canal, filled it with lye and washed it out to sea). The British officials and merchants were furious at the destruction of their property, and when the news reached London the response was to send a large military force which arrived in June 1840. Thus the first Opium War began.

It really wasn't much of a military contest and it ended badly for the Chinese:

British warships, constructed using such innovations as steam power combined with sail and the use of iron in shipbuilding, wreaked havoc on coastal towns... In addition, the British troops were armed with modern muskets and cannons, unlike the Qing forces. After the British took Canton, they sailed up the Yangtze and took the tax barges, a devastating blow to the Empire as it slashed the revenue of the imperial court in Beijing to just a small fraction of what it had been. In 1842 the Qing authorities sued for peace, which concluded with the Treaty of Nanjing negotiated in August of that year and ratified in 1843. In the treaty, China was forced to pay an indemnity to Britain, open five ports to Britain, and cede Hong Kong to Queen Victoria. In the supplementary Treaty of the Bogue, the Qing empire also recognized Britain as an equal to China and gave British subjects extraterritorial privileges in treaty ports. In 1844, the United States and France concluded similar treaties with China, the Treaty of Wanghia and Treaty of Whampoa respectively.

The Opium War had far-reaching consequences, morally, politically and economically. It gave the British Hong Kong and established the Western nations power in China, but also rotted the country's economy and culture. It bred long-standing resentments in China which would have severe repercussions in the 20th century. But that's a story for another day...