Dyed-In-The-Wool History
The Chinese Opium Trade
Jim Pederson Dyed-in-the-Wool History January 20, 2025
While the industrial revolution was driven by key technological advancements it still required a source of capital which was equally important. The triangle trade had established capital and manufacturing capability in the New England states but the slave trade was winding down. The revolution gave New England merchants’ access to the Far East that they had previously been blocked from by the English which created vast fortunes but the details of how this developed are overlooked by popular history.
China in the 17th century was a relatively prosperous country that needed little from outside although it did have a rapidly expanding population. While not being a modern nation state like the sea faring nations were developing into, it was a classical “civilization state” with a common culture and history built around Confucianism. They generally viewed their culture as being superior and thought it appropriate that outsiders would seek to come to China to acquire Chinese knowledge and goods. The Chinese had a lowly view of these would be visitors referring to them as fan kuei which roughly translated as “foreign devil” or barbarian(1 p. 14). In the Confucian value system, merchants who were driven by profit held a place near the bottom of the social scale as opposed to western liberalism where they were near to top. (1 p. 15)
In the later 17th century, England was importing Chinese products, most notably tea which the new-factory worker class consumed in large quantities. The Chinese, however wanted few English products. The flow of silver was one way and it was draining England’s mercantile wealth to the middle kingdom (1 p. 14). When one country has a large and continuous trade deficit with another, if the exchange is in specie (silver in this case) the country running the deficit will quickly drain their reserves. If the exchange is in currency, even fiat currency, the currency that is being exported will, without some way to create demand for it, become worthless. In order for trade to continue some reciprocal cycle where the currency that leaves from the net consumer nation is returned most commonly in the form of an import that has mutual benefit. It can also, as we have seen in more recent times, be in the form of land, raw materials, investment assets, and instruments of debt. In this case the return cycle was created in the form of a highly destructive and illegal product that devastated and destabilized an entire region of the world.
England was a sea power with a dominant Navy that was accustomed to imposing their terms on people around the globe but this was at odds with China’s restrictive trade system that also showed no respect for the foreign traders. In 1793, emissaries from King George III of England presented the Chinese with a set of demands that included the ceding of a piece of land, an island or a coastal strip, where the British would establish a permanent trading colony (1 p. 15). The Emperor’s mandarins forwarded this response from the “Son of Heaven” to the English monarch:
“Our Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There is therefore no need to import the manufactures of outside barbarians in exchange for our own produce. But as the tea, silk, and porcelain which the Celestial Empire produces are absolute necessities to European nations and to yourselves, we have permitted, as a signal mark of favor, that foreign hongs [private businessmen who paid the government for the right to trade with barbarians] should be established at Canton, so that your wants might be supplied and your country thus participate in our beneficence.” (2 p. 25)
While illegal drugs are still very much a societal problem today and are also big business, they were even more so during this era. Opium wasn’t just big business, it was a critical economic engine of the time. By controlling India, Britain oversaw one million opium farmers. In 1850, this drug alone accounted for a remarkable 15% to 20% of the Empire’s total revenue. Historian Fredrick Wakeman described the India-to-China opium trade as the “world’s most valuable single commodity trade of the nineteenth century”(3 p. 172) . Carl Trocki wrote in Opium, Empire, and the Global Economy, “The entire commercial infrastructure of European trade in Asia was built around opium”(4 p. 52) . Prior to establishing the opium trade authors Timothy Brook and Bob Tadashi Wakabayashi estimated that British imports from China were nine time more than exports to China.
The Chinese emperor had outlawed opium which created some public relations and political issues for the English government. To avoid the appearance of direct involvement, the British government would sell the opium in Calcutta to a private British chartered business – the East India Company – and claim no further knowledge or involvement from that point forward. The East India Company would move the illegal cargo up the Chinese coast with the protection and guidance of the English navy using coastal islands and anchored ships to store the cargo. Chinese criminal gangs would then pick up and distribute the opium making use of large scale bribery of local officials (1 p. 17). The opium trade between India and China was the exclusive privilege of the East India Company. Private English merchants were prohibited as were the American colonies. This forced the colonies to buy tea from the British which also generated significant tax revenue.
After the Treaty of Paris in 1784, the New England states wasted no time in entering the Asian trade. Robert Morris, who was known as the “financier of the Revolution” sent a ship dubbed the Empress of China to Canton. A group of East Coast merchants then pooled their resources to send a mixed cargo of ginseng, seal skins, and Hawaiian sandalwood to Canton (1 p. 18). This initially was a successful venture but they rapidly ran into the same balance of trade problem that the British had which threatened ongoing trade with China as well as the young nation’s treasury. As with the British, exporting opium to China was the solution but they had to source the opium from another location that the British didn’t control. Turkey provided a source and because the British weren’t allowed to carry it, the Americans had an effective monopoly on the Turkey-to-China opium trade. Soon prominent New England families were making fortunes with an estimated 37.5% return on investment.
One of the first major merchants to enter the Asian opium trade and who also played a very major role in US history of this period was Stephan Girard who was a French immigrant to Philadelphia. Girard was born in 1750 in Bordeaux France to a seafaring father and became an apprentice officer at the age of 14. He then went on to be a successful sea captain, international merchant, investor, financier, and banker dying in 1831 at the age of 81. He was the main investor in the first Bank of the United States and kept the government solvent during the War of 1812. Girard was also an opium exporter to China which played a critical role in amassing his fortune. His primary trade routes were originally the West Indies but by 1795 he saw the Chinese trade offered better opportunities in both the near and long term based on world events and committed to designing and building his own Asian trading fleet (5). At first he was uncertain on what mix of cargo and routes to build this business on but soon settled on opium procured in Mediterranean as the key product around which his business would be built. In this he followed the lead of other prominent Philadelphia families including Walns and Wilcockes who were already sourcing opium from Turkey and other Mesopotamian locations. He exited the trade in 1824. After his death his fortune became entangled in a legal battle with his heirs / family and therefore didn’t create generational wealth.
A family that became dominant in Asian trade around this time was the Perkins clan of Boston who created a lingering impact on US history that really shaped the development of the country. Samuel Russell of Middletown, Connecticut established Russell and Company which became the largest smuggler of Turkish opium to China. Prior to that they were involved in the slave trade but that business was in decline (6). The opium trade was so valuable that Russell sought out to recruit and train ambitious young men with appropriate background and competence. The fortunate trainees could clear a profit of $100,000 by the time they were thirty years old which would equate to millions of dollars within six years of graduating college in the modern world (1 p. 18). One of these young men was Warren Delano who first sailed out with Russell and Company when he was 24 years old in 1833. Delano was a Yankee “blue blood” with his ancestors tracing back to the early immigrants to Plymouth from East Anglia. Delano was Franklin Delano Roosevelt’s material grandfather and his fortune was the source of the generational wealth that allowed his grandson to live a life of luxury without the responsibilities of work allowing him to focus on his political career (1 p. 20).
A young New England “blue blood” like Warren Delano would have felt somewhat oppressed living under the rules of the canton system. Their movements were severely limited and they were not allowed to deal directly with any Chinese official but rather had to deal through Hong merchants. Far from being a business limited to a few connected families, nearly all of the American firms dealing with China under the Canton system were engaged in the smuggling of opium. In Gold of Ophir: The China Trade in the Making of America, authors Sydney Greenbie & Marjorie Barstow Greenbie concluded that apart from one or two firms all foreign firms present in Canton were engaged in the smuggling of opium in some fashion and concluded that the American merchants acted with disregard towards the Chinese authorities (7 p. 174). One firm, N&G Griswald of the Griswald family from Connecticut, wrote that Americans “have always been more or less engaged in the [opium] trade, and probably always will be. We believe that ultimately the Emperor [of China] will find it necessary to legalize the traffic [of opium] under the imposition of heavy duties.”(6 p. 10)
The Hong merchant assigned to work with Russell and Company was named Howqua and he would have been the principal Chinese contact Delano would have interacted with. The relationship with Howqua had already been established by John Perkins Cushing (1 p. 22). Cushing was Perkin’s nephew and was only 16 when he hired on. By 26 he was the assistant head of the Perkins office in Canton. Cushing proved capable and innovative at circumventing the Chinese as well as navigating other business challenges. Working with Howqua, he established a system where ships carrying opium would send a messages using a fast boat to Cushing of their pending arrival. The Perkins and Company ships would not enter Canton or take on a ship pilot. Instead the ships would anchor off the small island of Lintin at the entry to the Pearl River. Chinese smugglers would meet them, purchase, the opium, and return directly to Chinese shores. After initial success ships were anchored permanently in Lintin serving as floating warehouses (6 pp. 7,8). After the opium was offloaded the ships would proceed up the Pearl River to Canton with legal cargo (1 p. 22). Howqua is believed to have become one of the richest men in the world through his dealings with Perkins, Cushing, and other “barbarians” (1 p. 22)
The bribing of Chinese officials was rampant and the distribution was done by Chinese criminal gangs. American sea captains also made fortunes smuggling opium. While being aware of the effect this was having on the Chinese population there was rarely a mention of this in the thousands of pages of correspondence sent back to American (1 p. 22). Robert Bennet Forbes defended his involvement stating: “those to whom I have always been accustomed to look up as exponents of all that was honorable in trade—the Perkins, the Peabodys, the Russell's and the Lowe's.” (8 p. 71) For the Americans and British the opium trade had reversed the flow of silver which flowed back to the west, for China it was an unmitigated evil draining its wealth, corrupting its people, and breaking down the cultural bonds that held the country together.
While British and American merchants had in many cases been able to work around the Canton system rules they continued to advocate for western enclaves where they could operate under their own rules free from Chinese authorities. A new party in this struggle was the American missionaries who at this time were synonymous with northern Protestants principally Congregationalists and some Presbyterians who were just beginning to arrive on merchant ships in the 1830’s. The churchmen along with the merchants sought access to the Chinese mainland to build schools, churches, hospitals, to learn the language and to be left alone by Chinese government. To this end they became very effective at conveying the message to American congregations and raising money. (1 p. 23) As time passed the American missionaries created a fanciful and almost entirely false view of China that created broad support for their cause amongst American Protestants and the American population as a whole. They became known as the “China Lobby” and played a significant role in the start of WWII and the Cold War.
Lin Zexu, who had suppressed the opium trade as governor of Hunan province, was made Imperial Commissioner of the Canton trade with the mission of stamping out the opium trade. Commissioner Lin forced the foreign traders to turn over their opium stock which they initially denied they had until surrounded by troops under what was in effect a siege. Lin then dug huge trenches that were filled with the opium along with a mixture of salt and lime which was then flushed into the ocean. A month later in July of 1839 Commissioner Lin sent a letter a letter to Queen Victoria that went in part as follows:
“We have heard that in your own country opium is prohibited… this is a strong proof that you know full well how hurtful it is to mankind. Since then you do not permit it to injure your own country, you ought not to have the injurious drug transferred to another country.… Of the products which China exports to your foreign countries, there is not one which is not beneficial to mankind.… Has China (we should like to ask) ever yet sent forth a noxious article from its soil?… [If] foreigners came from another country, and brought opium into England, and seduced the people of your country to smoke it, would not you, the sovereign of the said country, look upon such a procedure with anger, and in your just indignation endeavor to get rid of it?… Let your highness immediately, upon the receipt of this communication, inform us promptly of the state of matters, and of the measure you are pursuing utterly to put a stop to the opium evil. Please let your reply be speedy…”(1 p. 24)
The Chinese were well aware of the mass destruction to their society and culture that opium was causing. There are not year to year statistics on how wide spread the opium consumption was in China on a year to year basis but estimates of addiction by province done around 1909 range from 20% to 50% of the adult male population and the use and abuse of the drug was by no means limited to men. (9 p. 194)
The British monarch had only been on the throne two years when she received the correspondence from Commissioner Lin and at the time and was just twenty years old. The decision she reached wasn’t based on morality but on hard economic reality. Quoting Timothy Brook and Bob Wakabayashi in their book Opium Regimes, “The British Empire could not survive were it deprived of its most important source of capital, the substance that could turn any other commodity into silver.” (9 p. 6) Queen Victoria dispatched the British navy in November of 1839 to undertake sea bombardment of the Chinese coast which began the First Opium War that lasted until 1843 (1 pp. 24-27). The Chinese lacked any real defense against a modern military that could project naval power across the globe. After being thoroughly defeated by the British, the Chinese were forced to sign the Treaty of Nanking which was the first of other treaties to follow that would erode and then collapse Chinese sovereignty. China paid Britain millions of dollars and was forced to abolish the Canton system, cede the island of Hong Kong to the British and open five trading ports that were largely under foreign rule.(1 p. 26) John Quincy Adams was a congressman from Delano’s district at the time firmly supported the British saying “a mere incident to the dispute; but no more a cause of the war than the throwing overboard of the tea in Boston harbor was the cause of the North American revolution. The cause of the war is the pretension on the part of the Chinese, that in all their intercourse with other nations, political or otherwise, their superiority must be acknowledged, and manifested in humiliating forms” and “that stopping the opium trade was an outrage” that challenged “the rights of 11 nations” to sell opium to the Chinese in an article he wrote in 1841. (6 p. 10)
The United States didn’t directly participate in either the first or the second Opium Wars but it was partially responsible for the conflicts and benefited from them. The engagement of the American merchants in the Opium trade significantly decreased the market share of the East India Company which, in turn drove the British to try to increase their market there to make up for this loss (6 pp. 11,12). During the war British opium imports were halted and the market was effectively handed over to the Americans. By not participating directly in the war, the Americans gained some measure of good will with the Chinese and after the war gained access to the same Chinese ports brought about by the war.
Following the war and the end of the Canton system, the opium trade exploded. The British governor of Hong Kong wrote, “Almost every person… not connected with government is employed in the opium trade.” (10 p. 141) In July of 1844 a U.S.- China agreement was signed that was modeled after the Nanking Treaty. The Treaty of Wangxia established five new China districts that would be controlled by the Americans which included the ability to buy land and build homes. The treaty was negotiated by Caleb Cushing (1 pp. 28,29) who is a shadowy figure that appears in the background of many historical events of the period. Coastal China had largely become a western colony.
The Second Opium War occurred in 1857 when England and France jointly moved against the Qing government. They quickly captured Canton, disposed of the governor, and installed a more compliant administrator. The British, French, and American “barbarians” demanded that China legalize opium, exempt internal trade by foreigners from duties, adopt English as the official language of all future treaties, and allow official state-to-state relations (1 pp. 31-32) . The western states also demanded that their ambassadors be allowed to live in the capital of Beijing. The Chinese being unable to resist capitulated on all points an opened ten more treaty ports along with allowing foreign commercial and military vessels to navigate the Yangtze River giving easy access to most of the Kingdom. Concessions were also made to American missionaries and the word “barbarian” was banned in reference to foreigners.
When the American merchants returned to the states they were seen as enterprising businessmen who became wealthy as the result of legitimate import/export trade in such things as tea, silk, and porcelain. They were even treated as experts on China and the Far East while having not explored the country or its culture (1 p. 28). They described a China that was riddled with drugs and generally backwards and in need of America’s intervention to redeem their land and their people by exporting Yankee culture to the Far East. To the extent that there was some truth in their description of China, they had played key roles in creating it. There was also some level of opium consumption that “followed them home” but the nature of those who became addicts was very different from the street criminal image drug abuse largely has today. Throughout the 19th century the typical addict was a married female, frequently affluent, and this appears to have remained the case even after War Between the States which did produce a large number of morphine addicts.
During the first half of the 19th century there were many individuals and families, almost all of who were from New England, Philadelphia and New York, who established substantial fortunes from Asian trade. For many the sums of were so vast that they created generational wealth that became the “seed corn” for American economic expansion. Any person or family that came into wealth from international trade during this period was either directly involved in the opium trade, and the vast majority were, or their business was made possible by it. James Bradley who wrote the China Mirage that was used extensively in writing this abbreviated account and who has authored other books on Asian – American relations summarized this impact as follows:
“Opium merchants like Delano provided the seed corn for the economic revolution in America. Delano invested his new fortune in a host of ventures: New York waterfront property, railroads, copper mines in Tennessee and Maryland, and coal mines in Pennsylvania, where a town was named Delano in his honor. The Perkins family, who had pioneered the transport of Turkish opium to China, built Boston’s Athenaeum, the Massachusetts General Hospital, and the Perkins Institution for the Blind. America’s first railroad—the Quincy Granite Railway—was built to carry stone from Perkins’s quarries to the site of the Bunker Hill Monument.
Opium money funded any number of significant institutions in the eastern United States. John Perkins Cushing’s profitable relationship with Howqua helped finance the construction of America’s first great textile manufacturing city, Lowell, Massachusetts. America’s great East Coast universities owe a great deal to opium profits. Much of the land upon which Yale University stands was provided by Russell family money. A Russell family trust still covers the budget of Yale’s Skull and Bones Society, and Russell funds built the famously secretive club’s headquarters. Columbia University’s most recognizable building is the Low Memorial Library, honoring Abiel Abbot Low, who worked in China with Warren Delano in the 1830s. John Cleve Green was Delano’s immediate predecessor as a senior partner in Russell and Company, and he was Princeton University’s single largest donor, financing three buildings. (Green also founded America’s oldest orthopedic hospital—Manhattan’s Hospital for Special Surgery—from his opium fortune.) Among the railways financed with opium money were the Boston and Lowell (Perkins), the Michigan Central (Forbes), the Chicago, Burlington, and Quincy (Forbes), and the Chesapeake and Ohio (Low), among others.
The influence of these opium fortunes seeped into virtually every aspect of American life. That influence was cultural: the transcendentalist Ralph Waldo Emerson married John Murray Forbes’s daughter, and his father-in-law’s fortune helped provide Emerson with the cushion to become a professional thinker. It was found in technology: Forbes’s son watched over his father’s investment in the Bell Telephone Company as its first president, and Abiel Abbot Low provided start-up money for the first transatlantic cable. And it was ideological: Joseph Coolidge’s heirs founded the Council on Foreign Relations. Several companies that would play major roles in American history were also the product of drug profits, among them the United Fruit Company, started by the Coolidge family. Scratch the history of an institution or a person with the name Forbes attached to it, and there’s a good chance you’ll see that opium is involved. Secretary of State John Forbes Kerry’s great-grandfather was Francis Blackwell Forbes, who got rich selling opium in China.” (1 pp. 28-30)
In addition to funding economic advancement the family wealth attributable to the Asian opium trade created a new leisure class of writers, philosophers, academics, and political activists that had little knowledge of the lives of “ordinary people” or the challenges of economically supporting themselves. They wrote prolifically and documenting what is now our past creating both collective memories and collective amnesia of events and people. Some were abolitionists and others ironically played a role in the expansion of slavery either as planters or as merchants and financiers. The demographics of planters during this time haven’t been studied to a significant degree but not all planters were from southern states. Many in the westerns states of the old south came from other areas and brought New England family money with them.
A final point to consider about these events is the recurring historical differences between land based and sea based civilizations. Land based civilizations tended to be largely self-sufficient and stable over long periods of time relying on trade principally for raw materials they cannot source internally. Sea based civilizations or “sea people” are dependent on trade to obtain what they didn’t have from others and frequently didn’t have goods which are of value to a land civilization. Land based civilizations value tradition while maritime powers have ever changing values and constantly pursue material and technical development. Rather than building civilizations, they tend to be “pirate states”(11). This pattern has been true throughout history and the British were the classic example of a sea power. America was a mixed land with the New England states and New York being a classic example of a maritime power while the South was a land based civilization.
Bibliography
1. Bradley, James. The China Mirage. New York, New York : Little Brown and Company, 2015. 978-0-316-19667-3.
2. Gentzler, J. Mason. Changing China: Readings in the History of China from the Opium War to the Present. New York, New York : Praeger, 1977.
3. Wakemenr, Fredrick Jr. The Canton Trade in the Opium War. New York, New York : Cambridge University Press, 1978.
4. Trocki, Carl A. Opium, Empire, and the Global Economy. New York, New York : Routledge, 1999.
5. Goldstein, Jonathan. Stephen Girard's Trade with China 1787 - 1824. Portland, Maine : MerwinAsia, 2011. 978-0-9836599-6-9.
6. Pence, Carson M. Working Paper No. 37, The American Opium Trade. Portland, Oregon : Portland State University, 2019. https://pdxscholar.library.pdx.edu/cgi/viewcontent.cgi?article=1038&context=econ_workingpapers.
7. Greenbie, Sydney & Greenbie, Marjorie Bastow. Gold of Ophir: The China Trade in the Making of America. New York, New York : Wilson-Erickson, 1937.
8. Ward, Geoffrey C. Before the Trumpet. Vintage : s.n., 2014. 9780804173339.
9. Brook, Timothy and Wakabayashi, Bob. Opium Regimes: China, Britain, and Japan 1839-1952. Berkley : University of California Press, 2000.
10. Booth, Martin. Opium: A History. New York, New York : St. Martin's, 1996.
11. Dugin, Alexander. The Last Russian Battle. Geonojintnka. [Online] January 6, 2023. https://www.geopolitika.ru/en/article/last-russian-battle-six-main-positions.