The Stacking Room: Opium Factory at Patna" (1851) (Wellcome Collection)
Opium’s role in the history of East Asia has been well-documented, most notably perhaps in Julia Lovell’s definitive 2011 book The Opium War. This, and others like it, deal with the issue mostly from the perspective of the consuming countries, in particular China; Thomas Manuel’s Opium Inc. is noteworthy in focusing just as much on the producer: India.
The outline of the story is well-known. Britain (then as now) was running a large trade deficit with China: the British bought masses of tea, while the Chinese were peculiarly uninterested in British products such as woolens. But opium plugged the hole. Although China had some of its own opium, Indian production was better and cheaper, and in what might otherwise have been a textbook example of Ricardian competitive advantage at work, China began importing so much opium that the trade balance turned the other way. Chinese attempts to ban both opium and the trade ultimately led to the two Opium Wars, the establishment of Hong Kong and what China has called “the century of humiliation”.
The strength of Manuel’s book is that he includes a detailed description of India’s part in this sorry saga: he sums it up as “the Chinese got opium, the British got tea, and the Indians got colonialism.”
Opium’s role in the history of East Asia has been well-documented, most notably perhaps in Julia Lovell’s definitive 2011 book The Opium War. This, and others like it, deal with the issue mostly from the perspective of the consuming countries, in particular China; Thomas Manuel’s Opium Inc. is noteworthy in focusing just as much on the producer: India.
The outline of the story is well-known. Britain (then as now) was running a large trade deficit with China: the British bought masses of tea, while the Chinese were peculiarly uninterested in British products such as woolens. But opium plugged the hole. Although China had some of its own opium, Indian production was better and cheaper, and in what might otherwise have been a textbook example of Ricardian competitive advantage at work, China began importing so much opium that the trade balance turned the other way. Chinese attempts to ban both opium and the trade ultimately led to the two Opium Wars, the establishment of Hong Kong and what China has called “the century of humiliation”.
The strength of Manuel’s book is that he includes a detailed description of India’s part in this sorry saga: he sums it up as “the Chinese got opium, the British got tea, and the Indians got colonialism.”
Opium Inc.: How A Global Drug Trade Funded The British Empire, Thomas Manuel (HarperCollins India, August 2021)
The British didn’t invent the international opium trade: that distinction, says Manuel, goes to the Portuguese, but it took the Dutch to make it big business:
Suddenly, in the late seventeenth century, the opium trade began to flourish. Not to China but to the Dutch-controlled ports like Batavia (currently Jakarta), Malacca and Manila in the Philippines… By the end of the century, opium exports from Bengal were forty-three times higher than they were at the beginning.
When the Dutch East India Company declined, and the East India Company took over Bengal, the British took over the trade as well, claiming monopoly rights on Bengali opium in 1773. The trade was initially restricted, helpfully raising price in China, but:
In 1830, all attempts at restricting trade… were unceremoniously ended. Between 1830 and 1839, the area under cultivation doubled in size. Opium exports tripled…. By 1860, the area of opium cultivation had almost doubled again. Then, in three years, by 1863, it had doubled again! So over the century, the lands devoted to opium cultivation went up by almost 800 per cent. There were eventually one million peasant households cultivating opium on approximately half a million acres of land.
This drove the development of Indian bureaucracy, while the peasants were trapped between landowners, moneylenders and brokers. “The lives of these peasants were miserable,” writes Manuel.
This leads into what is Manuel’s main point, delineated in his subtitle: “How A Global Drug Trade Funded The British Empire”. Opium not only saved Britain’s trade balance, but also the finances of British India and hence the Empire:
At its peak, opium was the third-highest source of revenue for the British in India, after land and salt. This makes the Honourable East India Company a drug cartel masquerading as a joint stock corporation masquerading as a government. The British Raj in the nineteenth century was a narco-state – a country sustained by trade in an illegal drug.
Manuel’s conclusion is perhaps overdrawn—opium was the third-highest source of revenue, not the bulk of it—but the point is broadly true. Nor is he wrong when he says that the legacies of this trade remain today, in India as well as globally.
Again, it is in India where Manuel perhaps is most illuminating, at least for readers who only know the East Asian side of this story. While his description of the manufacturing process are Dickensian:
From farms, it was sent to factories where it was tested, standardized and packaged in chests of mango wood. These factories employed a small army of children to crawl over ceiling-high scaffolding and painstakingly maintain the precious drug till it was ready to be shipped…
the “business story” is fascinating in what it says about how trade, business, economics and politics intertwined. The market was thrown open in 1830 because the East India Company had failed in enforcing its monopoly in West India: so-called “Malwa opium” was proving a formidable competitor for the Company’s own Bengal product:
It began to allow any merchant to export opium from Bombay as long as they paid a transit duty. As paying the duty was cheaper than smuggling, the smugglers made the savvy economic choice. As a result, Bombay exploded into life.
Despite the baleful effects of opium on Indian society, Indians do not always come off very well:
opium money became a vital source of income for the government in India. This meant that the nationalist movement, as it gained purpose and momentum, remained curiously silent on opium. In their pragmatism, they didn’t want to risk winning the independence of an impoverished nation.
A book of this kind should be full of interesting titbits, and Opium Inc. has its share. One is that opium traders would bank their silver receipts in Canton and receive a document allowing them to cash out in London.
This method of moving money across the world before the banking system really existed became the most efficient way to transfer fortunes back to London from India. Soon, privateers who made fortunes in India would invest in opium and use these documents as a way of transferring wealth back home to England – regardless of how they made their fortune in the first place.
It’s obvious when you think about it.
Another, which one feels one ought to have known about, was the system of loan guarantee insurance operated by the merchants in Canton:
This system came to be known as the ‘Canton Guaranty System’ and became the inspiration for the first American bank deposit insurance statute, the Safety Fund Act of 1829.
Manuel’s book can make curious reading for non-Indians. He finds it necessary to explain that sherry is “a kind of wine that has been fortified with extra spirit for potency” and when describing opium’s origins, he notes that
The Minoans are one of the earliest civilizations in the European sphere, overlapping for centuries with the Indus Valley civilization thousands of kilometres away…
inverting the way such a comparison would “normally” go. These are healthy reminders that even the most objective study is ever grounded in certain cultural and historical points of view.
The book unfortunately contains more errors than it should. He writes, for example, of opium clippers “with the power of steam” in the 1820s, and how, during the Opium War of 1840s, one clipper “was deployed to carry mail for the British from India through the Suez Canal” which didn’t open until 1869. He has the “British Community in Hong Kong” during the First Opium War, and Russia denied trading rights in Canton because it had a separate treaty-designated “port” (it was a border post). These are for most part not very serious, but someone should have caught them.
Opium Inc. is a good, readable book, and a salutary Indian take on a subject that is mostly written solely with a China-Britain focus. More editing could have made it a very good book.
The British didn’t invent the international opium trade: that distinction, says Manuel, goes to the Portuguese, but it took the Dutch to make it big business:
Suddenly, in the late seventeenth century, the opium trade began to flourish. Not to China but to the Dutch-controlled ports like Batavia (currently Jakarta), Malacca and Manila in the Philippines… By the end of the century, opium exports from Bengal were forty-three times higher than they were at the beginning.
When the Dutch East India Company declined, and the East India Company took over Bengal, the British took over the trade as well, claiming monopoly rights on Bengali opium in 1773. The trade was initially restricted, helpfully raising price in China, but:
In 1830, all attempts at restricting trade… were unceremoniously ended. Between 1830 and 1839, the area under cultivation doubled in size. Opium exports tripled…. By 1860, the area of opium cultivation had almost doubled again. Then, in three years, by 1863, it had doubled again! So over the century, the lands devoted to opium cultivation went up by almost 800 per cent. There were eventually one million peasant households cultivating opium on approximately half a million acres of land.
This drove the development of Indian bureaucracy, while the peasants were trapped between landowners, moneylenders and brokers. “The lives of these peasants were miserable,” writes Manuel.
This leads into what is Manuel’s main point, delineated in his subtitle: “How A Global Drug Trade Funded The British Empire”. Opium not only saved Britain’s trade balance, but also the finances of British India and hence the Empire:
At its peak, opium was the third-highest source of revenue for the British in India, after land and salt. This makes the Honourable East India Company a drug cartel masquerading as a joint stock corporation masquerading as a government. The British Raj in the nineteenth century was a narco-state – a country sustained by trade in an illegal drug.
Manuel’s conclusion is perhaps overdrawn—opium was the third-highest source of revenue, not the bulk of it—but the point is broadly true. Nor is he wrong when he says that the legacies of this trade remain today, in India as well as globally.
Again, it is in India where Manuel perhaps is most illuminating, at least for readers who only know the East Asian side of this story. While his description of the manufacturing process are Dickensian:
From farms, it was sent to factories where it was tested, standardized and packaged in chests of mango wood. These factories employed a small army of children to crawl over ceiling-high scaffolding and painstakingly maintain the precious drug till it was ready to be shipped…
the “business story” is fascinating in what it says about how trade, business, economics and politics intertwined. The market was thrown open in 1830 because the East India Company had failed in enforcing its monopoly in West India: so-called “Malwa opium” was proving a formidable competitor for the Company’s own Bengal product:
It began to allow any merchant to export opium from Bombay as long as they paid a transit duty. As paying the duty was cheaper than smuggling, the smugglers made the savvy economic choice. As a result, Bombay exploded into life.
Despite the baleful effects of opium on Indian society, Indians do not always come off very well:
opium money became a vital source of income for the government in India. This meant that the nationalist movement, as it gained purpose and momentum, remained curiously silent on opium. In their pragmatism, they didn’t want to risk winning the independence of an impoverished nation.
A book of this kind should be full of interesting titbits, and Opium Inc. has its share. One is that opium traders would bank their silver receipts in Canton and receive a document allowing them to cash out in London.
This method of moving money across the world before the banking system really existed became the most efficient way to transfer fortunes back to London from India. Soon, privateers who made fortunes in India would invest in opium and use these documents as a way of transferring wealth back home to England – regardless of how they made their fortune in the first place.
It’s obvious when you think about it.
Another, which one feels one ought to have known about, was the system of loan guarantee insurance operated by the merchants in Canton:
This system came to be known as the ‘Canton Guaranty System’ and became the inspiration for the first American bank deposit insurance statute, the Safety Fund Act of 1829.
Manuel’s book can make curious reading for non-Indians. He finds it necessary to explain that sherry is “a kind of wine that has been fortified with extra spirit for potency” and when describing opium’s origins, he notes that
The Minoans are one of the earliest civilizations in the European sphere, overlapping for centuries with the Indus Valley civilization thousands of kilometres away…
inverting the way such a comparison would “normally” go. These are healthy reminders that even the most objective study is ever grounded in certain cultural and historical points of view.
The book unfortunately contains more errors than it should. He writes, for example, of opium clippers “with the power of steam” in the 1820s, and how, during the Opium War of 1840s, one clipper “was deployed to carry mail for the British from India through the Suez Canal” which didn’t open until 1869. He has the “British Community in Hong Kong” during the First Opium War, and Russia denied trading rights in Canton because it had a separate treaty-designated “port” (it was a border post). These are for most part not very serious, but someone should have caught them.
Opium Inc. is a good, readable book, and a salutary Indian take on a subject that is mostly written solely with a China-Britain focus. More editing could have made it a very good book.
Peter Gordon is editor of the Asian Review of Books.
