The Opium Wars: how Scottish traders fed the habit

THE BEGINNING of the 19th century was a good time if you were ambitious, male and British. There was money to be made in the Empire for those willing to travel in search of opportunity. Two young Scots, William Jardine and James Matheson set up a company that became hugely successful then and is still flourishing today. They also stand accused of starting the Opium Wars.

By the mid 18th century the powerful British-owned East India Company held the monopoly on all trade in the eastern empire. They had India sewn up, but China was still a closed door.

Chinese wares, like silk and tea were enormously attractive to Britain, but imperial China had little need for British manufactured imports like woollens. They did not welcome foreigners and saw no need to trade with the West. As a consequence only a few warehouses in Canton were given over to British traders. It was there, in 1832, that the two Scots entrepreneurs set up their trading company Jardine, Matheson Co.

Born in Dumfriesshire in 1784, Jardine left Scotland after completing his medical degree at the University of Edinburgh to work onboard ship as a surgeon's mate. Realising that there was more money to be made in trade he began importing and exporting goods from India to Britain.

Matheson was born in Sutherland and started out as an employee of the East India Company. When he and Jardine met they both wanted to escape the stronghold of the company. The place to do this was in China.

A great proponent of Adam Smith, Matheson saw in China the obvious necessity for free trade.

"Did not the laws of nature," he asked, "oblige all people to mingle freely with each other?" His conclusion was obvious. China must open and he believed Britain would do it.

So began a process which historian and broadcaster Saul David considers to be one of the most unforgivable acts of empire, saying:

"It was one of the blackest marks in the Imperial story, capitalism and mercantilism at its worst."

The enormous problem facing traders in China was the inequality of trading options. This imbalance was soon to be answered.

Opium was banned in China by an Imperial Court worried by its pernicious influence. For British traders, opium was the only commodity that they could ship from India and trade. The East India Company was the first to begin smuggling – or as they saw it "importing" – opium into China, and as their monopoly began to loosen, Jardine Matheson quickly saw the potential for enormous profits.As opium was prohibited in China it had to be sold indirectly to traders in Canton Bay. In the early 1830s some 20,000 chests of Opium were coming into China and by the end of the decade this rose to almost 40,000 - most handled by Jardine Matheson. As Jardine said: "Opium is the safest and most gentlemanlike speculation I am aware of."

To facilitate this lucrative trade the company built racing ships called clippers, which could undertake the journey from India to China in record time. Chinese smugglers were quick to patronise these floating warehouses.

Few traders allowed themselves the luxury of sensitivity in their actions. However, Matheson's nephew Donald eventually became concerned about the physical and social effect of opium and resigned. Matheson himself maintained that he had "never seen a native in the least bestialised by opium smoking." To the Chinese the devastating effects of opium were obvious. Some sources conclude that by the late 1830s 90 per cent of the coastal population were addicts.

China decided to act and in 1839 it dispatched the high mandarin Lin Tse-Shin to Canton. He placed the traders under house arrest and demanded the surrender of all opium chests. Jardine Matheson handed over 7,000 chests. In total Lin Tse-Shin destroyed nearly 2 million worth of opium.

The British traders were expelled from Canton, but unwilling to give up a trading base, moved south to Hong Kong and continued trading.Jardine was travelling to Britain when he heard of the Chinese action. He immediately hurried to London where he was granted an audience with Lord Henry Palmerston, then foreign secretary. Jardine lobbied hard for British action and provided knowledge and maps to help plan an armed response.

Britain, prompted by the influential traders, went to war against China in 1839. Since then the question has been asked. Did Palmerston begin the Opium Wars at the behest of Jardine Matheson?

"If I had to say who holds the chief responsibility for the wars," concludes David, "then I'd have to say that the traders were to blame. And largest and most powerful amongst the traders was Jardine Matheson."

The British quickly overwhelmed the Chinese. In the face of massive British aggression and substantial loss of lives they were forced in 1841 to sign the Treaty of Nanking, which confirmed British possession of Hong Kong and opened up large swathes of China to trade.

Jardine Matheson had won. China had been forced to accept free trade and the opium continued to be sold.Shortly afterward both Jardine and Matheson retired. By then the company that had started with one ship had grown exponentially. They had moved on to banking, ship leasing, insurance, docks, cotton mills and mines.

Jardine returned to England, where in 1841, he successfully entered parliament as a Whig MP for Ashburton. When he died one year later Matheson succeeded his erstwhile business partner as the Whig MP for the same constituency. Matheson became a baronet in 1851 and was one of the richest landowners in Britain.

With his fortune, made in the East at the expense of so many, he bought the Isle of Lewis where he spent hundreds and thousands of pounds building an extravagant castle. He lived a long life before dying in the South of France aged 82.

Jardine Matheson Group continues to trade today from their base in Hong Kong.

• If you enjoyed reading this, you may want to read:

Adam Smith: founder of modern economic theory