Silver, Tea, and Opium

The origins of the global drug trade

As I have explained elsewhere, the structure of most modern drug policy bears profound resemblance with the structure of many historical salt tax laws. In each case, the production and distribution of the product in question is (or was) governed by a license system overseen by the state. Anyone who produces, distributes, or consumes their products beyond the confines of the licensing system is deemed criminal and subject to arrest, incarceration, execution, etc.

I’ve also explored how a change in salt tax policy in Tang Dynasty China resulted in an outflow of capital from the Chinese salt industry. This capital was then redirected into the tea and silk trades, which boomed in China in the following decades and centuries.

Today I’d like to share how this influx of capital caused by relaxed salt taxes became a major factor in the cascade of events that eventually evolved into the War on Drugs.

Roots in Tang Dynasty Salt Industry

In China during the Tang Dynasty, the official Salt Commission practically controlled the government. As the biggest revenue-raising arm of the China’s imperial body, the entire state was beholden to its interests. The Salt Commission was itself inextricably linked with China’s salt tycoons. The result was a staggering accumulation of wealth, not unlike that which we see today in the tech sector, the pharmaceutical industry, and within the military industrial complex (which are all themselves allied in various ways).

The Salt Commission’s dominance of the Chinese state was so strong that it eventually proved harmful to the government and citizens it supposedly belonged to. In response, the financial framework of the Chinese empire was restructured so as to reduce the state’s dependence on the Salt Commission. As part of this process, salt taxes were cut drastically.

With this, a flight of capital occurred. Money that had circulated primarily within the salt industry left, in search of new opportunities in adjacent sectors. In China at the time, the two trades that were then burgeoning were tea and silk.

Wealth which had been accumulated within the salt industry was then set loose upon the tea and silk trades. Perhaps not surprisingly, they flourished over the following generations.

Tea had thus positioned itself as a major trade within China’s merchant class by the time the first Europeans eventually made their way to China.

The Hot, New Drug: Tea

Europeans traveling in China in the sixteenth century encountered tea and brought it back with them to Europe. The beverage gradually became more and more popular with European consumers, particularly in Britain and northern Europe, slowly replacing what had been widespread consumption of alcohol and assorted local herbal drinks.¹

Tea became more affordable for British consumers, and thereby more popular, when the British East India Company (one of the world’s first joint-stock corporations²) started purchasing it from Chinese traders in 1713.³ By the mid-eighteenth-century, tea was a major British import. It was immensely popular across classes and social groups throughout Britain and elsewhere in Europe—not to mention India and China, where the tea itself came from.

China, anxious to avoid another silver shortage—such as that which it had experienced at the end of the Ming dynasty—demanded silver in exchange for its tea.⁴ Much of the silver spent by Europeans on Chinese tea originated in mines in the western hemisphere which had fallen under colonial control.⁵  

But as tea consumption skyrocketed in Britain, the nation experienced its own silver shortage.⁶ The silver shortage grew so severe that it posed a threat to Britain’s economy. In this same period, Britain’s colonies in North America achieved independence, becoming the United States. The loss of colonial control brought with it a loss of revenue for the British empire. The simultaneous silver shortage (via the tea trade) and loss of revenue from US independence both dealt considerable blows to Britain’s economy.

The Great Silver Heist

In response, the British devised a plan to expand their colonial control, get their silver back, and ultimately restrengthen the empire’s economy. The tea they drank came from China and India. Most of the silver they had spent on tea resided in those nations. To replenish their silver holdings, the British sold Indian opium to China, accepting only silver as payment.

The British began to monopolize the Chinese opium trade around roughly the same time the US achieved independence.⁷ In 1776, just a few dozen tons of opium were exported from India to China. That figure would rise to well over three thousand tons a year within some decades as the British took over and glutted the Asian opium trade.

Historian James Bradley has described Queen Victoria as “history’s largest drug dealer."⁸ At its peak, according to Bradley, opium was the “single largest source of income” in Britain, and accounted for 15 to 20% of the British Empire’s revenue.⁹ The British East India Company had become for Britain what the Salt Commission was for Tang Dynasty China: the most powerful revenue-raising institution in the empire.

Chinese officials could easily see that the British-Indian-Chinese opium trade was a calculated move to replenish Britain’s silver supply. They thus banned the trade in the 1790s. We should note, however, that China had already tried to ban opium decades earlier, in 1729.¹⁰ China’s 1729 opium ban was arguably the beginning of the modern era of drug prohibition. Just like every other attempt at prohibition in history, however, it failed.

In any case, after the British started to dump massive amounts of Indian opium into China, China tried, for the second time, to ban it in the 1790s. Unsurprisingly, this did not work either. It did lead to two wars with Britain and an extended period that is known as China’s “Century of Humiliation”—a concept that has since become absolutely integral to the ideological roots of the Chinese Communist Party (CCP) [or the Communist Party of China (CPC), whichever acronym you prefer].

What may surprise modern readers however is the nature of the original Chinese argument for prohibition, which is somewhat different from the arguments most often presented today by modern governments.

In fact, the entire landscape around opium use in imperial China differed considerably from the stereotypical narrative often attached to it.

Opium: A Misunderstood Drug

When the British began to monopolize the trade, opium was not new to China. It had been introduced there roughly one thousand years earlier by Arab traders.¹¹ After it was embraced by the Chinese military, opium slowly spread through Chinese civilian culture. At least one emperor specifically ordered merchants to obtain it.¹²

Like salt and cannabis, opium had a variety of uses before it became permanently etched into popular consciousness as a “drug” (or in salt’s case, a “food”). For example, opium leaves and oil were eaten as food.¹³ Its oil was also used for lighting, like hempseed oil. And of course, opium was widely used as a medicine. Before the rise of synthetic drugs, opium was one of the most effective medicines against malaria. Historically, this was common knowledge throughout southeast Asia.¹⁴

The practice of smoking opium is thought to have been introduced to China by the Dutch, who themselves have stood at the vanguard of countless drug trends.¹⁵ This happened well over a century before the British monopolized the Chinese opium trade.¹⁶

In China, even during the nineteenth century when rates of opium use were at their highest, patterns of use varied widely from casual, sporadic use among friends to repeated, daily use among habitual consumers.¹⁷ Opium did not generally induce unstable behavior, and fatal overdoses were rare.¹⁸

When friends, families, and business partners gathered, providing opium to smoke was a sign of hospitality. Opium use was not associated with poverty, but rather, with wealth and social status.¹⁹ In some wealthy families, opium was prepared by “opium sous-chefs,” employed by the household specifically for the task.²⁰

Additionally, the morphine content of the opium used in China was among the lowest in the world.²¹ The opium crops with the highest morphine content tended to go to western markets, particularly Europe and the US.²² Intravenous injection of refined opiates did not catch on until later, so, unlike today, drug use was not associated with infectious disease—instead, as we saw with malaria, the opposite was the case.

The Realpolitik of Opium Prohibition

If opium use in imperial China did not result in widespread death, disease, or destitution, why was it prohibited? The answer has as much to do with silver as with opium. As we already learned, the British accepted only silver as payment for opium. This was largely due to the fact that Britain depleted its silver holdings on tea. The British had developed the opium enterprise to replenish their silver supply. It was just one component of a multifaceted attempt to colonize Asia and extract its wealth.

The enormous amount of opium sold to Chinese consumers resulted in a notable loss of silver from China. The loss of silver, in turn, led to economic crises and social unrest.²³ The outflow of silver from China’s economy as well as the attendant social unrest were both factors in the argument to prohibit opium.²⁴ Other goods could be bought with different currencies and from various nations, but opium was almost exclusively bought from British merchants who demanded silver. That this silver funded a nation intent on dominating China was itself a central issue in the debate around opium prohibition.

Additionally, in China, opium prohibition was pushed by a class of scholars who vied with the court aristocracy for power. Painting opium use as a morally decrepit activity that hurt the state was advantageous for scholars who sought to demonstrate their political prowess in a time of great competition between China’s scholastic class and its aristocracy.²⁵ Dispensing with opium was suggested to be a sign of modernity. It was also, perhaps more importantly, suggested as a way to fight British imperial aggression and, in the process, assert economic sovereignty for China.²⁶