Opium

by Martin Booth

  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 we
re 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.

  To become such a vital cash crop, vast tracts of productive land, formerly used for a wide variety of agriculture, were turned over to poppies. And, although most Indian opium originated from Bengal, there were other locations engaged in production.

  There were three kinds of prepared Indian opium. That from Bengal, also called ‘Company’s opium’, had an outer covering which was black and was therefore known as ‘black earth’ whilst opium from Bombay was called ‘white skin’ and that from Madras ‘red skin’.

  ‘Black earth’ was produced in the vast East India Company factories in Patna and near Benares, as previously outlined, and sent down the Ganges River for 300 miles to Calcutta. Fleets of river craft carried the chests from late November until March, the first public auction taking place on the Monday morning before Christmas.

  At an auction, there could be 4000, 5000 or even 6000 chests for sale to the highest bidders, with the terms set at a small down payment with the remainder due in an agreed number of months. A second auction was conducted in February, with a third in April; if the harvest was plentiful, there was a fourth in May or even a fifth in June or early July.

  The opium was purchased by firms, such as the British-owned Jardine Matheson and Dent & Co., or American companies, such as Russell & Co. of Boston and Perkins & Company. Indians and Parsees, like Heerjeebhoy and Dadabhoy Rustomjee, also traded in opium, as well as lone British entrepreneurs. Some firms did not bid directly but through agents or purchased supplies from those who had themselves bid, paying a slight premium for the convenience.

  Onward shipping was carried out by vessels which had sailed from Britain with manufactured goods or raw materials, such as minerals or bales of wool. When these were unloaded, a new cargo was taken on of India cotton, saltpetre and opium. The first port of call en route to China was Penang, where fresh water and fruit were loaded and some opium was traded to Malay natives as well as to expatriate Chinese who sold their opium into the deep south-west of China and the area today covered by Vietnam.

  Whampoa was approached by sailing up the Pearl River estuary and into the river mouth, known by its Portuguese name of Bocca Tigris (the Tiger’s Mouth), passing either Macau on the western shore or Lintin Island, more or less in the centre. At intervals along the shore imperial forts kept watch on maritime activity.

  Before 1830, opium was carried in general cargo vessels, sturdy broad-beamed craft some over a century old. They could only sail with the wind so voyaged east from India during the summer south-east monsoon, returning in winter with the north-east monsoon which blew from October to March. With the exception of the receiving ships which held a stock of opium, trade in the drug was seasonal, just as was that of tea and silk, for the famous East Indiamen were similarly unable to sail against the prevailing wind. These old ships were so well built – often of as much as a thousand tonnes of well-seasoned timber – some of them were still afloat in 1897: one, sold for salvage in the middle of the century, realised over £7500 for her timbers, the equivalent of more than £3 million today.

  A seasonal trade was disadvantageous to merchants for it meant that their vessels spent a disproportionate amount of time idle whilst the price of opium was liable to fluctuation. What was needed was a new type of ship which could sail against the wind.

  The result was the designing and building of sleek ships with narrow hulls, flush decks, and the capability to beat to windward. This new breed of vessel was the clipper. The classification, based on the mariner’s colloquialism ‘to go at a good clip’, meaning to sail quickly, referred both to small vessels which sailed against the monsoon as well as the later craft, such as the famous Cutty Sark, ten times the size, which beat every wind in the tea trade. The opium clippers were to become famous, beautiful ships – state-of-the-art vessels in their day. The subject of many paintings, they carried three slanting masts and a wide spread of canvas. Most of the British, American and Parsee opium-trading companies owned at least one of them.

  It is believed the first opium clipper was a craft named Red Rover. With a displacement of 254 tons, she was built on the Hooghly River in 1829 and named after the pirate hero o
f James Fenimore Cooper’s latest novel. She was modelled on the Prince de Neufchatel, which had captured nine British merchantmen during the British-American War of 1812. Her builder, Captain William Clifton, guaranteed he could provide a vessel which would do the India/China round trip thrice annually and who, before the launch, staked his reputation by announcing she would beat the monsoon on her first voyage. She did, completing the round trip from Calcutta to Macau in eighty-six days. Later, she established a record of eighteen days for the voyage from Calcutta to Lintin Island, a remarkable maritime achievement. Red Rover spawned an entire generation of vessels and was eventually bought by Jardine Matheson in the late 1830s as an addition to their fleet of over a dozen clippers.

  Another much copied ship was the Sylph, not to be confused with Dobell’s American craft mentioned earlier. She was a 251 ton barque, even faster than the Red Rover, designed by Sir Robert Seppings, Surveyor to the Royal Navy. The opium merchants also used ex-naval warships, their fire-power an effective deterrent to Chinese pirates and customs vessels: most clippers carried a complement of five guns either side, with a 68-pounder, known as a ‘long-tom’, amidships. James Matheson purchased HMS Curlew, an eighteen-gun brig, in 1823, which served as an opium runner for many years under the name Jamesina.

  During the first twenty years of prohibition, little serious attention was paid to the 1799 edict or any of the restrictions which followed it but, in 1820, new severe penalties were laid against opium importation. Any Chinese found in possession was executed. The penalties made the captains of the receiving ships lying off Whampoa restive. A decision was made to move the receiving ships to Lintin Island, today known as Neilingding Dao. Meaning ‘Solitary Nail’ because of its single 1000 foot peak, Lintin is positioned 80 miles south of Canton (today called Guangzhou) and 20 miles north-east of Macau. Although a mere 3 miles long with no natural harbour or convenient landing, it became the entrepôt port for the opium trade. Its geographical position in the estuary made it convenient for importers and buyers alike and it was not unusual to have fifteen clippers lying offshore.