How Indian opium traders from Bombay helped the British Raj wreck China’s economy


September 26, 2018

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Jamsetjee Jejeebhoy, who helped build modern Bombay and was the first Indian to be knighted by Queen Victoria, was a prominent figure in the business.

Article by Girish Shahane | Scroll India

Jamsetjee Jejeebhoy & Company, founded 200 years ago in September 1818, encapsulated the enterprise-driven cosmopolitanism of Bombay. The firm was named for its Parsi head, who took as partners the Gujarati Jain Motichund Amichund, the Konkani Muslim Mohammed Ali Rogay and, later, the Goan Catholic Roger de Faria. The island city was, till the end of the 18th century, a harbour without a catchment area, unable to generate enough business to pay for its administration. The East India Company, which leased Bombay from the British Crown, gave serious thought to divesting itself of the islands.


In 1818, the British army decisively defeated the Marathas and established the Company Sarkar across much of Western India. In June that year, the Company banished the last Peshwa, Baji Rao II, from Pune, clubbing together most of the newly conquered lands into the Bombay Presidency and providing the island city with a hinterland.

Bombay had begun to find itself by then, thanks in part to a decision taken by William Pitt the Younger in 1784. One year after becoming the British prime minister at the age of 24, Pitt slashed duty on tea from 119% to 12.5% in an effort to route black market sales into legal channels. British purchases of Chinese tea skyrocketed, but the Chinese desired few British goods in exchange. The imbalance created a massive current account deficit which threatened to become a currency crisis thanks to the outflow of silver from Britain to China.

The solution was opium, Indian opium. The Company Sarkar had a monopoly on the import of tea into Britain. It also enforced a monopoly on the supply of opium in India. The Company purchased the crop from poppy growers in Bihar and Benares, processed it in its factories, and auctioned it in Calcutta for export to Canton, modern Guangzhou. However, it didn’t control the poppy producing region of Malwa, from where Bombay-based merchants began sourcing opium to establish their own drug businesses. Cotton was also exported to China from Calcutta and Bombay, but opium was more lucrative.

Jamsetjee Jejeebhoy made a series of journeys to the Wild East by ship while still in his teens. During one of these voyages, aboard the 1200-tonne Brunswick in 1805, at the peak of the Napoleonic wars, he was taken prisoner by French forces. He befriended the ship’s surgeon during his ordeal, a man named William Jardine who, in partnership with James Matheson, went on to found the largest opium agency in Canton. Two decades after Jejeebhoy and Jardine met, Jamsetjee Jejeebhoy & Company and Jardine Matheson & Company formed an enormously effective collaboration. Through the 1830s, Jejeebhoy was the largest consigner of opium to Jardine, who grew to be the richest Tai-Pan of them all. In 1842, Jejeebhoy became the first Indian to be knighted by Queen Victoria, and in 1858 the first to be awarded a baronetcy. His charitable endeavours helped build a modern city, and his name is dotted around the metropolis, a hospital here, a school of art and architecture there. The causeway connecting the former islands of Mahim and Salsette is named after his wife Lady Jamsetjee.

Dark side of ‘China trade’

This inspiring story of enterprise, adventure, cosmopolitanism and philanthropy has a dark shadow. Opium sales were prohibited in China through an imperial edict in 1729. Everybody involved in the opium trade in Canton, Calcutta, Bombay, Daman and London knew the activity was illegal, and the discourse about the drug’s harmful effects was well advanced by the early 19th century. The East India Company auctioned the product in Calcutta rather than selling it in Canton to avoid accusations of trafficking in contraband, leaving trading houses such as Jardine Matheson to deal with smugglers, who peddled the product upriver and took it to every part of mainland China.

As the drug trade grew exponentially, the Chinese emperor decided to end it once and for all, sending a viceroy named Lin Zexu to do the job. Lin confiscated all the opium in Canton’s warehouses and burned it. William Jardine returned to England to lobby for British reprisals, even as Jamsetjee wrote letters urging the British to force China to compensate the traders’ losses. It was, after all, merchants in Bombay and Calcutta who bore most of the risks. They handed out hard currency for the drug and only got repaid once their partners in Canton sold the opium on to smugglers, the repayment coming in the form of bills of exchange that took a long time to redeem.

In 1839, the British launched an assault on China, ostensibly in favour of free trade, although the East India Company’s zealous policing of its opium monopoly within India made the premise laughable. Once the war was won in 1842, the British imposed humiliating terms on the Chinese, including the handover of Hong Kong, which would replace Canton as the premier landing port for opium, and become the second city after Bombay to be built substantially with profits from the drug trade.

In 1858, the year Victoria was crowned Empress of India, the East India Company made 15,317,337 pounds sterling, or 48% of its Indian income, from land revenues. That same year, its opium sales peaked at 6,864,209 pounds sterling, which means opium provided a little over 21% of the total income of the Indian government that year.

At the beginning of the 20th century, some 5% of China’s population was addicted to opium. By then, Chinese farmers had begun growing poppies, and the British had created massive tea plantations in Assam and Bengal, ending the triangular trade between China, Britain and India. The history of the opium monopoly, of drug smuggling and war, was forgotten within Britain and India, in some respects actively suppressed. Biographies of 19th century Parsi merchants such as Jamsetjee Jejeebhoy deployed the euphemism “China trade” and made no mention of opium. During the handover of Hong Kong to China in 1997, the British press glossed over the history of its violent takeover, focusing instead on the peaceful lease of the New Territories which was coming to an end. The two cities I have lived in for the longest duration, one in India and one in England, each have a Chinese restaurant called The Opium Den, and the name has stayed uncontroversial.

In this century, the opium trade has finally received attention, most notably through Amitav Ghosh’s Ibis trilogy. But Indians by an large remain ignorant about this episode in history, and even those aware of the China trade tend not to comprehend how important opium was to the finances of the East India Company. Not only did British imperialism destroy India’s economy, it wrecked China’s as well, the latter with the help of Indian merchants. The greatest naval power on earth actively supported one of the most massive contraband smuggling rackets in history, and waged war against the world’s most populous nation on behalf of a group of drug lords.