The story has it that in 1664 the King of England, Charles II received two pounds of tea from China. He enjoyed drinking it and suddenly tea became very popular in his kingdom. In the late 18th century Britain was importing annually close to 7,000 tonnes of tea from China. The Exchequer imposed 100% tax on the import making tea an excellent source of government income.
While the import of tea became essential, payment for it was quite problematic. China was still an economic giant and virtually an exclusive producer of highly valued commodities such as silk, porcelain and tea, among others. But after experimentation with paper money – ingenious but perhaps premature in the fiscal realities of that time – China was ‘hungry’ for silver not only to energise its economy but to pay for the administration and the army that held the large empire together.
Chinese domestic production of silver was meager: it imported silver from Japan which in the early 17th century may have reached over 7,000 tonnes annually. Then the European traders arrived - Portuguese, Spanish and British, all eager to obtain goods from China. But the Middle Kingdom wanted little if any goods from Europeans, only silver. And so, about 40% of world silver in circulation was making its way to China. Typically in the form of the popular Spanish dollar or ‘eight real coin’ – the most reliable international currency of that period, usually made from Latino-American silver.
Gradually the ‘eight real coin’ became harder to obtain as Spain wanted to restrict its circulation to her own colonies and to pay for overstretched military commitments in Europe and abroad. Britain experienced a large trading imbalance with China, importing nearly three times more than exporting. In the early 19th century British initiated commercial plantations of tea in India and Sri Lanka (then Ceylon), in an attempt to break the Chinese monopoly on tea. But the growing of opium in India proved even more advantageous.
Trade in Indian opium to China was brisk and extremely profitable, but illegal. The bulk of opium was traded via smugglers, pirates and corrupt officials. In order to relax Chinese restrictions on trading and opium prohibition Britain went to war in 1839-42 and 1856-60. During the parliamentary debate in 1840, William Gladstone - future Prime Minister – made a passionate speech against the war, stating that the British ‘flag is become a pirate flag, to protect an infamous traffic.’
British success in the pursuit of its trading advantage had far reaching consequences. Opium trafficked to China led to social devastation, in some coastal areas up to 90% of people suffered addiction and untold misery. The wars subdued China to foreign imperial exploitation and undermined its ability to govern itself effectively and to defend its independence. They resulted in a long period of unrest punctuated by famines, revolts and arm conflicts. The number of deaths, destruction and human suffering is difficult to quantify. And enforced opium trafficking to China paved the way to modern, world-wide intractable drug crime, public health problem and the enormous waste of resources.