Category Archives: opium

by | 15 May 2022 · 2:57 am

Origins of the Santa Fe Railroad

From From the River to the Sea: The Untold Story of the Railroad War That Made the West, by John Sedgwick (Avid Reader / Simon & Schuster, 2021), Kindle pp. 83-85:

It no longer needed a visionary. It needed moneymen from the great capital centers of Philadelphia, New York, and Boston.

Of the three, Boston was the most railroad minded. It had been the nation’s first major hub, with any number of lines running in and out of the city. For a small city on a stub of a peninsula, Boston was surprisingly worldly. The first great Boston fortunes were made in the China trade, then amplified by investments in the textile mills of early industrialization, only to be compounded by provident marriages to the daughters of other wealthy Bostonians. The investors were referred to as the Boston Crowd because of this interbreeding. They were mostly drawn from that class of Bostonians—Brahmins was the derisive term—whose members were, in the main, Harvard-educated Episcopalians, with the occasional Unitarian thrown in, who lived for their clubs and thought of themselves as existing on a social plane only slightly down from God. They were like honeybees in a hive—industrious but interchangeable.

From this esteemed collective about the only one to emerge with a distinctive personality was Thomas Jefferson Coolidge—and he on the strength of a surprisingly frolicsome memoir he had privately printed, the copies limited to just forty-eight—who served as the Santa Fe president for a year starting in 1880. Coolidge took his middle name from the American president, his great-grandfather on his mother’s side, but his lineage could be traced back to a Coolidge who settled in Watertown, just downriver from Boston proper, in 1630.

Coolidge grew up in Canton, China, where his father was a partner in a Boston trading firm that dealt tea and opium in the China Trade. After Harvard, he married the daughter of William Appleton, clipper ship owner, European trader, president of Boston’s Second National Bank, congressman, president of the Massachusetts Hospital, and one of the richest men in the city.

Coolidge served as the ambassador to France, and on any number of important national commissions, but he prized above all else his membership in The Friday Club, which, he noted, had once blackballed the eminent Dr. Oliver Wendell Holmes, father of the Supreme Court Justice, for fear he would dominate the conversation. His memoir is rich in frivolity—meeting the actress Fanny Kemble at a monastery in the Alps, touring the Caribbean aboard his eighty-foot yacht, riding a donkey to the temple of Ramses in Egypt.

In recounting his life, Coolidge mentioned his yearlong presidency of the Santa Fe railroad only in passing. In October of 1878, he wrote, he took his son and namesake for an extensive tour of the West that covered almost ten thousand miles, particularly enjoying the Colorado portion aboard the Santa Fe Railroad with one William Barstow Strong. Coolidge did not mention that he was a director of the company at the time. When he returned to the West two years later, he noted that he again boarded a Santa Fe train, but this time stepped off at Topeka, where “I was elected president of the Atchison Railroad at the annual meeting.”

Six sentences later, he was done with it. “I resigned as soon as I could,” he wrote. “I think in about a year and a half.” He failed to mention that on assuming the presidency, he had purchased $700,000 worth of the company. The point being, he presided over the Santa Fe only as an investor. The moment the investment seemed unpromising, he sold it and got out.

None of the Boston Crowd served as presidents for more than a few years. But this was the way of the modern corporation as they came to define it. They were not managers, but investors, and that inclined them toward caution in a business that demanded daring.

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by | 10 May 2022 · 9:55 am

Nationalizing the Opium Trade

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 446-447:

With the advent of a free, legal, and open Asian commerce in opium, the native merchants of India and China moved to dominate the trade, squeezing out the Europeans who had acted as go-betweens in the past. By the 1870s, the India-China opium trade was so firmly locked up in the hands of native traders on both sides that there was no longer much money to be made by the Western firms that had pioneered the “country” trade in the early part of the century. In the face of declining profits, Jardine, Matheson & Co. (now run by a slew of nephews and other descendants of the founders and their partners) pulled almost entirely out of the opium trade in 1873, joined by other large Western firms. Domestic production in China, meanwhile, kept rising—ultimately to such stupendous heights that it would dwarf the continued imports of the drug from India. The dawn of the twentieth century would find China producing ten times as much opium internally as it imported from abroad, an explosive abundance of cheap domestic narcotics that would create a public health emergency worlds beyond even the most exaggerated estimates of what had existed in the 1830s prior to the Opium War. So much for the virtues of legalization.

In spite of the best efforts of moral activists at home, the British government would ultimately do nothing to scale back the dependence of British India on opium revenues or otherwise try to help prevent the growth of the drug’s use in China. Meanwhile, the Qing dynasty would continue in its failure to suppress or even regulate the use of opium by the general public in China, wallowing in a quagmire of official corruption it could not escape. Up to the twentieth century, though, Britain’s role in that process would be dwelled upon more by westerners than by the Chinese. It was the English-speaking world that condemned it as “the Opium War” from the beginning, while Chinese writers through the nineteenth century, including Wei Yuan, simply referred to it as a border dispute or foreign incident. To them, opium was a domestic problem and the war was a minor affair in the grand scheme of China’s military history. Only after the fall of the Qing dynasty in 1912 did historians in China begin to call this war “the Opium War” in Chinese, and only in the 1920s would republican propagandists finally transform it into its current incarnation as the bedrock of Chinese nationalism—the war in which the British forced opium down China’s throat, the shattering start to China’s century of victimhood, the fuel of vengeance for building a new Chinese future in the face of Western imperialism, Year Zero of the modern age.

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by | 8 May 2022 · 1:44 pm

Opium-funded Philanthropy in India

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 432-433:

Funneling the vast fortune from his China trade back into real estate in Scotland, Matheson would die the second-largest landowner in the entire United Kingdom.

Neither James Matheson nor William Jardine went in for significant philanthropy as John Murray Forbes’s uncle Thomas Handasyd Perkins had done in Boston, but a loftier place in public memory was reserved for Jamsetjee Jeejeebhoy, Jardine’s longtime associate in Bombay. With a fortune made by dominating the opium and cotton export trade of western India, Jeejeebhoy poured his own money locally into Parsi charities, famine relief, schools, hospitals, and public works, establishing himself as one of the leading figures (the leading figure, by some fawning accounts) who turned Bombay from a colonial backwater into a modern global metropolis. A director of banks and newspapers along with managing his business empire and funding many charitable works, Jeejeebhoy was a steadfast supporter of British rule, and on February 14, 1842, just as the war in China was nearing its end, Queen Victoria knighted him. “I feel a high, I hope a justifiable pride,” he said at the time, “in the distinction of being enrolled in the knighthood of England, marked as that order has ever been by the brightest traits of loyalty and honor.”

Jeejeebhoy was the first Indian to become a British knight, and in 1857, Victoria would make him a baronet as well. The name of “Sir J. J.,” as he is known colloquially, adorns schools and hospitals in Bombay to this day, the great philanthropist of the city’s Victorian past. As one Gujarati newspaper rhapsodized at the time of his death in 1859, “His hospitals, rest houses, water works, causeways, bridges, the numerous religious and educational institutions and endowments will point to posterity the man whom Providence selected for the dispensation of substantial good to a large portion of the human race.” Of the fact that so much of that “substantial good,” dispensed to such a “large portion of the human race,” was made possible by Jeejeebhoy’s sale, through Jardine and Matheson, of Indian opium to Chinese smugglers, little is said.

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by | 6 May 2022 · 4:04 pm

Parliament Debates the Opium War

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 405-407:

The motion finally came to a vote at four o’clock in the morning of April 10 [1840] after three grueling nights of debate. Five hundred and thirty-three weary parliamentarians filed out into the division lobbies, and when their votes were tallied, it turned out that Palmerston had prevailed by the slimmest of margins. A majority of just nine votes—271 to 262—allowed Melbourne’s government to escape censure and effectively gave Palmerston’s war in China a sanction to proceed as planned. The outcome was so close that if the very cabinet ministers whose conduct was on trial had not been permitted to vote in their own favor, the motion to condemn them would have passed. For that reason it had been said that if the majority were fewer than ten votes, Palmerston and the other ministers would still agree to resign. It was, but they did not.

It is impossible to measure exactly how much influence George Staunton had on that outcome, but at least seven or eight of the Whig lawmakers had openly expressed their willingness to defy their party and oppose the China war if the debate should convince them it was morally unjust. If Staunton had declined to support Palmerston, or even had spoken against him, it would have taken just five of those waverers to change their votes and the entire outcome would have been reversed. James Graham’s resolution of censure would have passed, Melbourne’s government would have been brought down, and the Opium War might have been prevented.

An angry opposition press hunted for parties to blame. Some faulted Graham for couching his resolution in such political language of “negligence” rather than targeting the war head-on: if the Conservatives had “proposed to stop the war at all events, and to prevent every infraction of the laws of China with respect to opium—so surely would Parliament have gone along with them, in censuring the conduct of the Ministers,” said the Spectator. Another paper observed that though the ministry survived the vote of censure (barely), nevertheless “they are condemned by two hundred and sixty-two of the people’s representatives, and by the nation at large the principle of the war is all but universally condemned.” A majority of just nine votes out of more than five hundred “would have been fatal to the existence of any preceding Administration,” said one critic, “and it argues a contempt of the opinion of Parliament, and a degree of assurance never equalled, to persevere in plunging the country into war on the strength of such a vote.”

Any lingering hopes that the closeness of the vote in the House of Commons might still derail the war were destroyed a month later with the failure in the House of Lords of a much more explicit motion to blame the crisis on British opium traders. Palmerston’s Conservative antagonists had a clear majority in the upper house, and the motion was expected to pass until the elderly Duke of Wellington—the general who had defeated Napoleon at Waterloo, Britain’s greatest living military hero, a former prime minister, and a Conservative—broke with his party to deliver an adamantly pro-Palmerston speech that silenced the motion’s supporters and sent it to a quick death.

Wellington said he had looked into the cause of the war and was positive that “it could not be opium.” The lanky, seventy-one-year-old “Iron Duke” argued that it was entirely about the protection of British lives in the far corners of the world, an unquestionably fair use of military power. The dispatch of a naval fleet was the only fitting and just response, he believed, to the rash and violent actions of Lin Zexu against Elliot and the British merchants.

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by | 3 May 2022 · 6:14 am

China’s Silver Shortage, 1830s

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 304-307:

There was nothing the government could do about the weather, but the root cause of the economic turmoil in the 1830s, and the problem from which many of the others grew, was a human one: China’s monetary system had gone haywire. It was mainly a problem of currency, of which the Qing dynasty had two primary forms: copper for small transactions and silver for large ones. Copper came in minted coins (with holes through the middle so they could be strung on a loop for convenience), while domestic silver—nearly pure and known in English as “sycee”—was unminted, traded by weight in units of measurement called taels that were just under an ounce. In normal times, a tael of silver was worth a thousand copper coins, and, value for value, the excessive difficulty of moving large amounts of copper between provinces meant that silver was the medium through which all long-distance trade was conducted within the empire. Silver was also, significantly, the basis on which tax quotas were assessed. By contrast, copper was the medium of the rural marketplace and menial wages. Nearly all of the income and savings of the lower classes of China—farmers, hired laborers, craftspeople—were in copper coins.

The crisis was that the value of silver had begun to rise sharply, and as it rose the exchange rate between silver and copper skewed out of control. From the ideal rate of 1,000 copper coins per tael of silver in the eighteenth century (even less at times, which was a boon for peasants since it meant their copper money was worth more), it had risen to 1,200 by the time Daoguang came to the throne. By 1830 it reached 1,365 copper coins per tael of silver and showed no signs of stopping. Since taxes were assessed in a fixed amount of silver, which had to be purchased with copper currency, this meant that by the early 1830s the peasants of China had suffered a nearly 40 percent increase in their effective tax burdens for reasons none fully understood. And as with nearly every problem in the empire, the corruption of officials made a bad situation even worse, as tax collectors commonly charged even higher rates of exchange so they could pocket the proceeds. By the late 1830s, some regions were reporting copper–silver exchange rates as high as 1,600 to 1, with tax collectors independently demanding as much as 2,000 copper coins per tael of silver owed. This dramatic decline in the worth of copper currency was disastrous for the general population, piling economic hardship on the poor who could scarcely bear it and sparking widespread tax protests that layered on top of all the other sources of dissent against the government. But although the emperor could occasionally grant tax amnesties to regions afflicted by floods or drought, the government quite desperately needed every tael of revenue it could get and so the exactions continued.

…

Even with that outflow of sycee silver, however, the inflow of Spanish dollars to purchase tea and silk at Canton should have been able to maintain a relatively steady overall silver supply in China (and in fact, since the late eighteenth century Spanish dollars had been preferred even over native sycee in some of China’s most important domestic markets). But on that count, a range of forces far beyond China’s borders came into play. First, it had been American merchants who brought most of the silver to China in the early nineteenth century (fully one-third of Mexico’s entire silver output between 1805 and 1834 was carried to China by Americans). But a shift in U.S. government monetary policy in 1834 made silver more expensive for American merchants, so they switched abruptly to using bills of exchange—which were acceptable to the Hong merchants but resulted in a decline in the amount of tangible silver entering the country from abroad. With the drop in American imports, China, which for centuries had been the world’s largest net importer of silver, unexpectedly turned into an exporter of the metal.

In the even bigger picture, though, what the Chinese scholars who blamed foreign trade and opium for the scarcity of silver in China did not realize was that it wasn’t just a Chinese problem: by the 1820s, silver was becoming scarce everywhere. Most of the world’s supply at this time had come from mines in Spanish Mexico and Peru (thus the importance of the Spanish dollar), but national revolutions in Latin America that began in the 1810s shut down those mines and choked off the world’s largest fonts of the precious metal. Global production of silver declined by nearly half during the 1810s—the same time its value began to creep upward in China—and it continued to decline during the decade that followed. The ramping up of the opium trade in 1820s China thus coincided fatefully with the onset of a global slump in silver output that would last for the next thirty years.

Regardless of where the specific blame lay, it was a devastating confluence of economic forces for China: the loss of sycee through the opium smuggling trade, the global scarcity of silver after the Latin American revolutions, and the drying up of American silver imports into China together helped cause a catastrophic decline in the empire’s supply of the metal. And it was a vicious cycle, for as silver became more valuable in China, wealthy families and businessmen would hoard it, removing even more from circulation and making the problem worse.

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Filed under China, democracy, economics, labor, Mexico, nationalism, opium, Peru, U.S., war

by | 1 May 2022 · 9:36 am

China’s Decline Under Daoguang

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 302-304:

Conditions in China were getting worse under Daoguang’s reign. By the time he took the throne, and to some degree beginning even with his father, Jiaqing, it becomes easier to speak of the empire each sovereign inherited rather than what he created or built. They, and the emperors and regents to follow, would have their successes—the dynasty would, after all, survive into the early twentieth century—but rarely did they leave China in a more solid position than they had found it. By the early nineteenth century, an inexorable process of decline was setting in, the slow setting of a sun that had reached its zenith under Qianlong in the late 1700s. Jiaqing had done his best, making strong efforts to rein in the corruption of the military and suppress the White Lotus and other rebellions. But under the rule of his son Daoguang, new problems would plague the empire even as old ones kept coming back in different forms.

Patronage, bribery, and embezzlement were the accepted norm among civil officials, especially in the lower orders. Population pressures on the land continued unabated, and Han Chinese settlers seeking an escape from the crowding continued to move into mountainous regions of the empire that had long been home to indigenous peoples, sparking incidents of ethnic violence. A breakdown of trust between the government and peasants worsened. The military was weakened by Jiaqing’s cost-cutting measures after the White Lotus campaigns. Through the 1830s, internal rebellions erupted in different parts of the empire with regularity, every year or two—some led by religious sects similar to the White Lotus, others by rebel factions bonded together by regional or ethnic ties. The many divisions that ran naturally through a vast and diverse multiethnic empire were turning more frequently and more visibly into fractures.

Opium wove its way right through the tattering fabric of this restive society, the single most visible symbol of the Chinese government’s inability to control its people. In spite of Daoguang’s strong desire to control the drug, coastal enforcements on smuggling had failed so completely that by the later 1830s when a foreign ship materialized near the coast it would find not naval patrols but thousands of buyers standing along the shore and whistling to it in hopes that it would drop anchor and sell to them. A major north–south land transport route for opium through Hunan province formed the locus of a series of uprisings that took place in central China in 1836, and imperial troops transferred inland to pacify them turned out to be such heavy users of opium themselves that they could barely fight. Ironically, they had acquired their drug habits in the course of their previous mission, which was to police the smugglers on the coast near Canton.

China’s rising domestic unrest caught the attention of foreigners in Canton, who worried about damage to tea and silk production from the disturbances in the interior. However, some of them also sensed opportunity in the ones that took place on China’s periphery. In 1833, an explosive revolt of aborigines on Taiwan threatened Qing imperial control of the island for several months, in the midst of which it was announced in Britain’s parliament that Taiwan had “declared its independence of the Chinese.” Some foreigners had already begun touting Taiwan as a potential British colony, a base from which they could conduct their trade with China free from the restrictions of Canton. They argued that, morally speaking, to take control of Taiwan would be nothing like trying to seize territory on the Chinese mainland, because Taiwan had been a Dutch possession prior to its conquest by Qianlong’s grandfather Kangxi, so they judged it to be merely a colony of the Qing Empire rather than essential Chinese territory. According to one Canton English-language newspaper, the Taiwanese were a conquered people, “vassals of China; not willingly, but in consequence of bloody wars,” and so even foreigners who opposed aggression toward China shouldn’t object to the British taking control of the island, which the paper judged would be praiseworthy even if only for the sake of “ridding its people of the tyranny of the Chinese.”

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by | 24 April 2022 · 12:38 pm

Opium Culture in Qing China

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 225-229:

It is unclear how many Chinese smokers of opium in the early nineteenth century were what we might call addicts. Some certainly were, but given how much was being imported they could not have been many relative to the size of the empire. By the start of Daoguang’s reign in 1820, the nearly five thousand chests being imported from India each year were enough to support about forty thousand average habitual users empire-wide, or as many as one hundred thousand of the lightest daily smokers, so at most a few hundredths of a percent of the population. Furthermore, most users at this time seem not to have been terribly debilitated by opium—they led productive lives and were not outcasts from their families or professions. Indeed, opium smoking was a generally open, public act and there were many socially encouraged reasons to take part in it. Medicinal reasons aside—and there were dozens of those—businessmen smoked opium to focus their minds and help them make smarter deals (at least they imagined that was the effect). Students smoked it for the clarity it brought, thinking it would help them succeed on the civil service examinations. For the stylish it was a relaxant to be offered to guests after dinner. For the privileged with little to do, like the eunuchs of the Forbidden City or Manchu courtiers with few responsibilities, it was an escape from boredom.

Opium was, in other words, perfectly acceptable in respected circles. An aesthetic culture of gorgeously wrought pipes and other accessories grew up around its use by the wealthy, the very expense and extravagance of those tools elevating the act of smoking itself. The Chinese fashion for smoking, moreover, was quite profligate in comparison to the eating of the drug that went on in Britain; much was wasted in the process, and a smoker could easily go through an amount of opium in one day that would kill someone who ingested it directly. For those in more humble situations who couldn’t afford to smoke it themselves, employment in the opium trade still provided a chance for income as couriers and petty dealers.

From a purely economic standpoint opium had its advantages. Valuable and easy to carry (it was worth more than three hundred times its weight in rice), foreign opium was a very good business proposition for Chinese merchants in Canton. Being illegal, it could be turned around quickly for a profit in silver—within a few days in most cases, as compared to tea, which involved large cultivation and transportation networks, and generally took half a year or more to produce a return on each year’s investment. Since the Canton traders made more back from their customers inside China than they paid to the foreign suppliers, trading in opium also served as a convenient way for them to increase their own silver stocks, which they could then use to procure tea for sale to the foreigners. And though they had to pay bribes to officials, the illegal trade was otherwise, de facto, free from taxes.

There is no evidence that the moral exhortations of the Daoguang emperor caught on with the general public in any meaningful way. The widespread public opposition to opium on moral and public health grounds for which China would be known in the twentieth century was at this time entirely absent. Though perhaps the public’s resistance to imperial moralizing was only to be expected; in the early seventeenth century, the Ming dynasty had tried to suppress tobacco for reasons very similar to the Qing dynasty’s ban on opium—even to the point of ordering execution for anyone who cultivated or sold it—but they did not succeed. By the time of the Qing dynasty, those prohibitions were long forgotten and tobacco was an accepted staple of daily life in China. There was no reason the Jiaqing or Daoguang emperors’ edicts against opium should have been more likely to find success.

The Chinese of the early nineteenth century are often described as being uniformly insular and scornful of anything foreign, thanks mainly to an overly literal reading of the boilerplate language in Qianlong’s edict to George III where he claimed that he did not value foreign things. But this was not really the case. For wealthy urbanites in China, Western goods were all the rage by the 1820s—furs, glass, intricate clocks, cotton textiles, and other products of the Canton import trade, which were highly sought after by those with sufficient money to buy them. Far from encountering any kind of disdain for foreign objects, Chinese retailers in the early nineteenth century found that attaching the adjective “Western” to their merchandise was in fact the key to a higher selling price.

This consumer fashion for foreign products helps explain why the opium from British India became so popular in China. Against latter-day nationalist claims that the British came and forced opium down the throats of helpless Chinese consumers, there was in fact an existing system of domestic opium production in China already in place to compete with the import market at Canton (especially in the empire’s western and southwestern provinces). There were also separate avenues for importing the drug overland from Central Asia—and opium from all of those sources was much cheaper than the Indian opium the British brought to Canton. But opium was a luxury good, and its wealthy consumers weren’t looking for a bargain; they were looking for status. Fashionable users of the drug in urban China preferred the opium from British India (the Patna, with its East India Company seal of quality) largely because it was “Western” and therefore seen as far more sophisticated to buy and smoke.

By the late eighteenth century, when British traders began carrying Indian opium in meaningful quantities to Canton, they did so because they knew a market was already waiting for them there. They could not force the drug down anyone’s throat—indeed, they couldn’t even get themselves into the country; all they could do was to carry their opium to China’s southern coast and sell it to Chinese agents. Everything from there on into the Qing Empire was entirely in Chinese hands. Moving forward into the nineteenth century, the extensive smoking of opium emerged as an almost uniquely Chinese social custom, the Canton market for the drug growing to become, primarily for domestic reasons, the most demanding in the world. If opium was illegal in name, it was almost never so in practice, a fact as apparent to outsiders calling at Canton as to insiders within the Qing Empire. As one British dealer testified to a government committee in 1830, “Every now and then there is a very strong edict issued against the trade; but, like other Chinese edicts, it is nearly powerless. It imposes a little difficulty perhaps for the moment, and enables the Mandarins to extort from the dealers.”

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by | 22 April 2022 · 9:39 am

Early Chinese Opium Trade, 1700s

From Imperial Twilight: The Opium War and the End of China’s Last Golden Age, by Stephen R. Platt (Knopf, 2018), Kindle pp. 193-194:

Robert Bennet Forbes, John’s rosy-cheeked older brother, was a middleman in the drug trade. The Lintin he had just fitted out in Massachusetts was destined for use as a “receiving ship”—based off the southwest corner of Lintin Island, far from the reach of the authorities in Canton, he operated it as a floating warehouse for drug shipments. Foreign vessels coming in from India and elsewhere with cargoes of opium would stop first at Lintin, offload their chests of the drug onto Forbes’s ship or another in the harbor, then proceed up to the Whampoa anchorage outside Canton with their holds empty of contraband and clean for inspection. In certain “money-changing shops” in the foreign compound, their captains or supercargoes could meet with the English-speaking agents of Chinese opium wholesalers (some, but not all, of whom were Hong merchants—since the trade was illegal, the Hong merchants’ monopoly on foreign trade did not apply to opium as it did to tea). After agreeing on a price, the foreign merchants took payment for their opium, while the Chinese dealers sent their own men out to Lintin to retrieve the shipment from the holding vessel.

Robert Bennet Forbes’s job was a simple one. His cargo was not his own; he merely held it on consignment for other traders who had assumed the risk (storms, pirates, market fluctuations) of getting it to south China in the first place. Chinese smugglers took all of the responsibility for moving the drug inland and up the coast—and, eventually, for retailing it within China. They also took responsibility for bribing government officials to ensure that no inspections would be made at Lintin, or at least to make sure that such inspections would be announced well in advance. There were in fact Chinese warships stationed on the opposite side of Lintin Island from Forbes’s ship, off the island’s northeastern shore, but they were under a different county’s jurisdiction than the smuggling anchorage and generally only sailed around the island in order to collect bribes from the smugglers before returning to the northeast again. As captain of the Lintin receiving ship, Robert Bennet Forbes thus bore almost no risk at all. All he had to do was stay put and keep the opium safe, earning a commission for each chest he held. The hardest part of the job, for a young New Englander who loved to sail, was having to stay in one place all the time. For suffering that, he brought in an income that in today’s currency was worth more than $800,000 per year.

The basic fact was that the opium poppy grew very well in British India, which otherwise was a spectacularly unprofitable colonial venture (and which, without the rich profits from the Canton tea trade to offset its losses and debts, would likely have bankrupted the East India Company). European traders learned early on that there was a steady if small market for opium in China even though it was illegal there. As early as 1719 we can find the Chinese demand for the drug making an appearance in The Farther Adventures of Robinson Crusoe, Daniel Defoe’s lesser-known sequel to his novel Robinson Crusoe, where Crusoe, who was rescued from his castaway fate in the previous book, made a run from Siam to China to sell opium, “a Commodity which bears a great Price among the Chinese, and which at that Time, was very much wanted there.” Though Crusoe originally intended to sail north in China to sell it, he was advised to “put in at Macao, where we could not have fail’d of a Market for our Opium.”

There are more formal records of British traders carrying Indian opium to China by 1733, when the East India Company notified the captains of two of its ships of “the late severe laws enacted by the Emperour of China for the prohibition of Ophium,” admonishing them that “you are neither to carry, nor suffer any of it to be carry’d in your Ship to China, as you will answer the contrary to the Hon’ble Company at your peril.” Going forward, the “Honourable Company” refrained from carrying any opium on its own ships, judging that the potential loss of its aboveboard tea trade was not worth the smaller reward to be gained from drug trafficking. That did not end the matter, however, but simply made an opening for independent operators who were more willing to take on the dangers of the illegal trade.

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by | 18 June 2020 · 9:59 am

Inside the Bubble, Shanghai, 1939

From Last Boat Out of Shanghai, by Helen Zia (Ballantine, 2019), Kindle pp. 81-82:

Blinded by their own good fortune and privilege, the children of Shanghai’s elite didn’t notice when their own neighbors couldn’t afford to buy food. Essentials such as rice, cooking oil, medicines, and fuel became scarce at any price. The Japanese military that surrounded Shanghai controlled the flow of goods, seizing whatever it wanted for its war effort or for its comfort. Scarcity drove prices into a dizzying inflationary spiral as hoarders and speculators gorged themselves on the desperation of others—those who couldn’t afford to pay black market prices starved. Without kerosene or coal, the poorest had frozen in the two harsh winters that had come and gone since the start of the war. Bodies of the poor and homeless lay as rotting detritus on the streets and alleys of Shanghai until corpse-removal trucks eventually took them away.

Benny didn’t have to think about the present when his future seemed predetermined and rosy, war or no war. Since he had passed the difficult entrance exam for admission to St. John’s Junior Middle School, his path all the way to its eponymous university was automatic as long as he continued to pass his courses. His parents had no worries for their son when everyone knew that doors opened for St. John’s graduates. They stood out in every crowd, speaking fluent English and carrying themselves as though they were proper English gentlemen and ladies. At both St. John’s and its sister institution, St. Mary’s Hall, classes were taught in English. Thanks to his alumni parents, Benny could already speak English well and would fit right in. So many of China’s most powerful political, business, and intellectual leaders had studied at its schools: T. V. Soong, former finance minister and governor of the Central Bank of China; Wellington Koo, representative to the League of Nations and ambassador to France; Lin Yutang, influential writer and philosopher; and a long list of others. The well-connected were well served. That was the Chinese way.

With his pedigree and school ties, Benny was set. Still, the boy harbored a secret wish for himself. He wanted to chart his own course, the way his father must have when he left accounting to join the police ranks. Benny hoped to pursue medicine when he reached college, for St. John’s had a medical school that was affiliated with the University of Pennsylvania in America.

But there were plenty of pitfalls in the sin city for boys like him. Shanghai was notorious for its spoiled firstborn sons who had nothing better to do than become playboys, squandering their families’ wealth on opium, women, and gambling, bringing shame to their families. Benny’s mother and her friends gossiped about the latest scandals about young men from reputable families during their all-night mah-jongg games. “Pay attention in school, and stay away from those bad boys,” she’d admonish her son afterward.

“Yes, Mother,” he’d reply obediently. Benny had already resolved to stay away from opium. He’d known what the narcotic had done to his grandfather.

Benny could easily have pursued a life of pleasure, as other Shanghai scions did. His family appeared to have unlimited resources. His father was thriving in spite of the war. Or as others might say, because of it.

Just as Benny didn’t see the beggars all around him, he had never thought about the ample food and luxurious goods that his police inspector father managed to bring home at a time when rice riots were breaking out in the city. Benny didn’t wonder how his mother could continue her shopping habits that allowed her to dress in the latest foreign fashions, adorned with ever-fancier jewelry. It was unthinkable for proper Chinese children to question their parents. Even when Benny noticed that some of his father’s associates looked rather tough and unsavory, like the kind of men that his mother warned him to avoid when he rode his bicycle, he would have never thought to ask about them. They were just people that a police inspector needed to know, like the assortment of British, Americans, Russians, Japanese, and other foreigners with whom his father dealt.

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Filed under Britain, China, economics, education, Japan, language, opium, U.S., war

by | 1 October 2009 · 5:31 pm

American Independence & Chinese Silver Imports

The June 2009 issue of Journal of World History has an enlightening bit of historical revisionism by Alejandra Irigoin entitled The End of a Silver Era: The Consequences of the Breakdown of the Spanish Peso Standard in China and the United States, 1780s–1850s (Project MUSE subscription required). Here are her conclusions (pp. 238-239).

This article argues for revision of traditional views of the global silver trade with China in the late eighteenth and early nineteenth centuries. Section I shows that the existing historiography tends to ignore that silver imports into China continued for longer than normally acknowledged and at increased levels up to the 1820s. New evidence shows that the structure of the silver trade changed substantially when US merchants became central intermediaries between Spanish American silver “producers” and Chinese “consumers,” when Chinese imports of silver consisted increasingly of Spanish American coins, the so-called pillar and bust dollars.

Section II explores the role of Americans as intermediaries who increased trade with Spanish America in order to obtain silver coins needed to trade with China. The timing of the flow of silver out of China to pay for opium purchases is challenged, as is opium as a cause for the desilverization of China. This article also questions received wisdom that reduction in the supply of silver owing to Spanish American independence was the root cause of silver scarcity in China in the early nineteenth century. This received wisdom ignores a fundamental fact: Spanish America itself was a significant reservoir of silver coins in the world. Thus, (relatively minor) interruptions in the production of silver—at different points in time and in distinct places—in South America during Independence were unlikely to account for supply shortages in China, and continued exports of silver into the United States confirm this view. Hence, the fall in Chinese silver imports must be a function of demand-side forces in addition to supply-side problems.

Spanish American independence presented a different problem to the global economy. The Spanish Empire broke up into a multitude of distinct states in the wake of independence, each fiscally and monetarily autonomous. In other words, the largest monetary union of the premodern world had collapsed. The resulting fragmentation of coinage and seigniorage across postindependent Spanish America terminated a silver standard that had organized international trade throughout the early modern world, East and West and in between. New republican governments, especially in regions with silver endowments, took over mint houses in the service of local and regional interests. Coins minted in various mint houses began to diverge in quality and fineness, whereupon the universal standard of the Spanish silver peso was definitively lost.

Section IV advances the central argument of this paper, namely that Chinese demand for silver, at least since the late eighteenth century, involved demand for a certified and reliable means of payment, as opposed to silver in some generic sense. “Good” colonial Spanish American coins traded at a premium over the sycee [ingot] equivalent, clearly confirming this point. Fragmentation of the Spanish monetary standard after independence had a devastating influence on Chinese demand. The impact of Spanish American independence on China’s economy operated through deterioration of coin quality, not through quantities of silver per se. By contrast, the United States used Spanish dollars as legal tender under the control of central monetary authorities, thereby succeeding in keeping new peso coins in circulation for a decade or more.

The end of the silver standard following independence in Spanish America during the 1810s and the 1820s had major consequences for development of the global economy before the gold standard. On one hand, termination of the silver era contributed to the poor economic performance of the Chinese economy. A lack of high-quality, reliable Spanish pesos between the 1820s and the 1850s, rather than insufficient silver mining, largely explains the fall in Chinese silver imports. Hence, I argue that the Chinese silver trade in these decades was demand-side rather than supply-side (mining) driven. Consequences for the internal market in China were manifold, including increased transaction costs, fragmentation of markets, and credit shortages. On the other hand, the United States reacted differently—and with a different timing—to termination of the silver standard. Immediate detrimental effects were weathered by workings of a well-integrated banking system, a quasi–monetary authority, and assay by the mint. Ultimately, this article poses an important comparative question for economic historians: in light of the US response, why did the Chinese empire never monopolize seigniorage, and why did it fail to provide reliable control of its currency system in the face of high costs for the domestic Chinese economy? Answers fall well beyond the scope of this article, of course, but the question should at least be framed in a global context.

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Filed under China, economics, Latin America, opium, Spain, U.S.