3.13 Fall and Rise of China: How to start a drug cartel in the 19th century

Last time we spoke about the numerous attempts of Britain to open the markets of the Qing dynasty. First we talked about the disastrous and quite embarrassing Macartney mission to China which would begin a series of more and more bad relations. After Macartney's mission came a significant increase in opium export to China via India on the part of the East India company. The British were literally and economically dependent on Chinese tea and were beginning to use nefarious methods to get their fix. Then came the Amherst mission which was even more of a catastrophe than the Macartney mission, the man did not even get to meet the Emperor. And so the Canton system of trade went unchanged, but for how long could this system manage the ever increasing demand from the British for more trade? Events are about to unfold which will see a entire nation swept up into a drug cartel.

This episode is how to start a drug cartel in the 19th century

Welcome to the Fall and Rise of China Podcast, I am your dutiful host Craig Watson. But, before we start I want to also remind you this podcast is only made possible through the efforts of Kings and Generals over at Youtube. Perhaps you want to learn more about the history of Asia? Kings and Generals have an assortment of episodes on the history of asia and much more so go give them a look over on Youtube. So please subscribe to Kings and Generals over at Youtube and to continue helping us produce this content please check out www.patreon.com/kingsandgenerals. If you are still hungry for some more history related content, over on my channel, the Pacific War Channel where I cover the history of China and Japan from the 19th century until the end of the Pacific War.

The year was 1830 and the 13 factories of Canton were rustling with business. The rules that governed the hundred or so foreigners who populated the factories were as strict as ever. After the Amherst mission George Staunton remained in Canton and took up a job working for the East India Company. What had changed the most since Staunton had come to Canton as a little boy was that competition was increasing. By 1830 the private traders taking up residence in the Canton foreign factories increased and they came from numerous nations such as India, Armenia, Britain, America and such. They were all competing with the East India Company which held a monopoly over British trade in Canton, but the private British traders now outnumbered the company 2 to 1. All of the private traders resented the company, as one scornful American put it "by its improper interferences and assumptions of superiority the company has earned the same dislike and unpopularity which a despotic and tyrannical government has entitled it to, in all other places where its influence extends". The company was a mammoth, many of its armed vessels were at Canton, but it had become sluggish and slow to react. The trade between India and Canton which was making private merchants filthy rich was not being carried on the company's ships, the reason being that that cargo was opium.

Some private merchants built ships and anchored them 60 miles away from Canton on some outlying islands, not daring to come any closer to the port. They would station their "receiving ships" there at places like Lintin Island far away from the Canton authorities and these ships would act as floating warehouses for drug deals. Foreign vessels came from India with cargoes of opium and would stop at Lintin, offload their chests and then proceed to Canton with their cargo contained no contraband and thus clean for inspection. Their captains came to port and met with Hong merchants, though some dealt with black market merchants. After agreeing on a price, the foreign merchant took their payment for the opium and the Chinese dealers sent their own boats to Lintin to retrieve the shipments. The warehouse ships anchored at Lintin did not own the cargo, they were merely holding it for other unknown merchants who assumed the risks of getting it there. The Chinese smugglers then took the responsibility for the illicit drugs when they smuggled it into China. The Chinese smugglers also bribed government officials to ensure no inspections would be made at Lintin island or that such inspections would be announced in advance. One captain of a warehouse boat, Robert Bennet Forbes earned 800,000 dollars of today's currency per year for these operations.

The opium grew magnificently well in India and the East India Company would go bankrupt without the profit it gained from the illicit trade. Although the East India Company consistently avoided carrying opium to China on its own ships, that did not mean it did not take part in the trade network. The company dominated the opium supply within India and held auctions in Calcutta where it would sell to the smugglers. Everyone got a piece, the East India Company, the foreign smuggler and the Chinese merchants. The proceeds after all when said and done was payments of silver which were handed over to the East India Company's treasury whom would give the smugglers in return bills to use in India or Britain. Thus the company would enjoy a constant flow of silver.

Now the East India Company did its best to contain the cultivation of opium in India, but as time went by Indian entrepreneurs realized the massive gains that could be made and began to produce opium and ship it to ports on India's coast. The East India Company needed to keep a tight lid on how much opium made it to Canton to ensure prices remained high and that the Qing dynasty did not crack down on the trade. But in their efforts to thwart the opium cultivators trying to compete with them, they ended up simply increasing production exponentially. The company literally began to buy out its competitors to try and control the production of opium, but by that point the price per chest of opium had dropped to nearly half its value. This would have a disastrous side effect. Up until this point in the 1820's, opium remained an expensive luxury good, but with the price of it dropping soon the non wealthy in China began to purchase it and the trade expanded. By 1823 opium surpassed cotton as the largest Indian export to China. By 1828 opium was looking like the only commodity left that could reliably secure a profit for merchants in the area. 10,000 chests of opium made its way to Canton in 1828. By 1831 nearly 20,000 chests reached Canton, quadrupling the trade over the course of a decade. Those chests did not include another 8% coming from Turkey via American smugglers, nor western Chinese grown opium. Those nearly 20,000 chests, 18956 to be more precise were worth nearly 13 million at the time, making it the most lucrative commodity trade in the world.

The independent traders, IE: smugglers formed their own community in Canton that rivaled the East India Company's factory. Their leader was the infamous William Jardine, a Scot with a degree in medicine from Edinburgh. Jardine had come to Canton as a surgeon's mate for the East India Company in 1802. When he graduated to full surgeon he was given a small space in the ship to carry his own cargo. He soon found that an illicit trade in Canton would provide him more profit than his work in medicine. Thus in 1817 after working 15 years for the company he quit to become a free merchant. After 3 years of his new life as a trader he ran into a fellow scot of higher birth named James Matheson who had like him begun the illicit business. The 2 men complemented another, Matheson was 12 years younger, more outspoken and temperamental and quite a good writer. He also had social connections back home in Britain and a lot of money. Jardine was more reserved and had a better head for business, but it was Matheson who was more willing to take big risks. In 1823 Matheson tried to sell some opium in Canton and failed horribly, but his family's wealth kept him afloat. In 1828 the 2 purchased a firm called Magniac & co and would rename it in 1832 to Jardine Matheson & Co. Stands to this very day.

Their company began doing business with opium merchants in Bombay and elsewhere in India. They settled down to live in "creek factory", just 2 doors down from the East India company factory. They opened a newspaper called the Canton register which began a campaign to abolish the East India Company's monopoly in Canton. To allow their illicit business to work, Matheson got an appointment as a Danish consul and Jardine a Prussian consul. They both mingled with many of the big smugglers in Canton like a Parsi named Jamsetjee Jeejeebhoy and competed with other companies such as the Russel & Co. The Russel & Co was an American firm which would end up handling 1/5 of the Indian opium coming into Canton, so do not believe this was exclusively a British enterprise.

On the other side of this, the Qing government efforts to suppress the illicit trade were infrequent and half hearted in part because many officials were themselves involved in the business. Officials along the coast and those in Canton were many of the former corrupt officials that worked under Heshen and thus were not strangers to working the system. Despite its official illegal status, the Canton opium trades flourished. A Hong merchant named Wu Bingjian, but known to the foreigners as Houqua rose to prominence. As stated by Thomas Forbes in 1828 "Houqua as a man of business I consider the first in the country". Houqua was the most influential trader in Canton. He was in his mid 60's, had drooping eyes, a pointed goatee and a long neck. Houqua handled all the business of the East India Company's factory in Canton along with other factories. He was revered by the foreign community for his honesty and business sense. Teas marked with his imprimatur were considered the best quality in the world. Houqua became a household name even in Britain and America and as it happens was likely the richest man in the world at one point. In the 1830's the Americans estimated Houqua was worth perhaps 26 million. Houqua lived on an island across from Canton and in a spare office there John Murray Forbes worked for Houqua as his secretary. Forbes at the age of 18 would be chartering multiple ships loaded with Houquas tea and would receive a generous 10% commission.

Now going back in time, in 1820, Emperor Jiaqing died and Emperor Daoguang took the throne. In 1810 Emperor Jiaqing revived his grandfather Emperor Yongheng's opium ban and by 1813 despaired at how it was spreading amongst the elite, even within his own palace. Apparently imperial guards and Qing officials in the palace were abusers of it. After his death, Emperor Daoguang carried forward his fathers opposition to opium. He said early into his reign "Opium is a great harm to the customs and morals of the people". He ordered an end to the coastal drug smuggling, targeting corrupt officials who were allowing opium to come into China. "If there are traitors who try to collect taxes off opium to enrich themselves, or wh personally smuggle it into the country, punish them immediately and severely in order to expunge this massing of insects". The same year he made these edicts a large number of scholars from coastal provinces showed up to take the civil service examination in Beijing only to die of convulsions from opium withdrawals over the 3 day test. How many addicts there were is hard to estimate. In 1820 with nearly 5000 chests being imported each year that would support roughly 40,000 habitual users, less than a hundredth of a single percent of the population. But by 1830 opium usage was exponentially increasing, the Daoguang emperor's initial concerns became full on alarm. He wrote an edict in January of 1830 "Opium is flooding into the interior, the multitude of users expands day by day, and there are more and more people who sell it; they are like fire and smoke, destroying our resources and harming our people. Each day is worse than the last". The reports pouring in from provinces were shocking. From Zhili province a report read "there are opium smokers everywhere, especially in the government office. From the governor general all the way down through the ranks of officials and their subordinates, the ones who do not smoke opium are very few indeed".

In response the the growing reports, in 1831, the Daoguang emperor order greater efforts be made to suppress the opium smuggling. Yet despite his orders, Beijing was unable to exert control over the provinces so affected because the local kingpins were proving themselves to be better providers for the locals than the central government. It was the kingpins employing people, providing income, security and by far could strike fear upon the populace if they were angered. When government officials would show up to crack down in the provinces, village mobs would attack them and turn them right back. This made Daoguang and his court tred very carefully as they understood how a full on rebellion was very possible. Thus Daoguang advisers cautioned any general campaign to stamp out opium smoking, do not go after the petty commoners suffering from financial hardships and addiction, but instead focus on hindering the smugglers.

Between 1831-1833 many minor conflicts occurred that would have amounted to nothing if it was not for the efforts of independent opium dealers looking to get rid of the East India Company. Of particular note was Jardine Matheson & Co who constantly wrote back to London the problems arising from allowing the company to hold a monopoly. Eventually the efforts of the smugglers paid off as in 1833 it was put to a vote to terminate the company's monopoly. By the autumn of 1833, news reached Canton that the East India company's monopoly would not be renewed when its charter expired the following May. Not only would it lose its monopoly, the East India Company would also no longer be allowed by the British government to continue its trade with China. The East India Company that had dominated trade for more than 2 centuries in Canton would vanish.

The Hong merchants were quite apprehensive at the news, it was not clear to them how the trade would now function. The Viceroy of Canton ordered the British to appoint a "tai pan" a chief executive who would be held accountable by Chinese officials for British trade conduct in Canton. The British government recognized the need to replace the role of the East India company with an alternative arrangement and agreed to create 3 superintendents of trade, a Chief superintendent, supported by 2 subordinates. "The Chief superintendent of trade would preside over a Court of Justice with criminal and admiralty jurisdiction for the trial of offenses committed by his majesty's subjects in the said dominions or on the high sea within a hundred miles from the coast of China". Now if you read that closely you realize, Britain just stipulated claims of extraterritoriality within the territory of the Qing dynasty.

Jardine and Matheson both worried the position of the superintendent would fall to George Stauton who arguably was the most qualified person for the job. But Staunton was an East India company man and they both worried he would bring with him the same bureaucracy that impeded upon the dealings of the independent merchants. Jardine and Matheson also took a hardline against Stauton between 1831-1833 trying to get the company abolished, he most likely would now return the favor. But to their joy, Staunton did not get the job, it went instead to William John Napier. Napier was a tall, redheaded and gallant captain of the Royal Navy and a veteran of the Napoleonic wars and fought in the legendary battle of Trafalgar. His qualifications and expertise in the trade of China amounted to nothing at all. Napier had zero experience in diplomacy, nor trade and he knew nothing about China. The cherry on top of all of this was that he was a proponent of free trade. He was to put it frankly, absolutely perfect for the smugglers.

For Napier it seems he fantasied about the power he might be capable of wielding in China, a country he understood to be "an enormous Empire of 40,000,000 that hands only together by a spiders web. What a glorious thing it would be to station a naval squadron along the coast and how easily a gun brig would raise a revolution and cause them to open their ports to the trading world". Napiers ambitions were known to some, such as Earl Grey who sent him a private letter politely asking Napier to "exercise the most careful discretion in all your dealings with the Chinese. Given the suspicious character of the Qing government and the Chinese people, nothing must be done to shock their prejudices or to excite their fears". Lord Napier was expected above all to keep the peace at Canton and to do no harm to the trade relations between Britain and China. Earl Grey had told him in person "persuasion and conciliation should be the means employed rather than anything approaching to the tone of hostile and menacing language. In the very worst case, should this not work, you are to show submission for a time and wait for new instructions from Britain". Thus Napier was forbidden from pursuing any aggressive action. Napier also received instructions from Lord Palmertson at the foriegn office which likewise told him much of what Earl Grey said. Palmertson said the highest priority was to avoid any conflict with the Chinese. It was desirable to establish a line of communication with Beijing, but Napier was not an ambassador and should not go to Beijing even if opportunity arose because he "might awaken fears, or offend the prejudices of the Qing government". Palmertson also asked Napier to find out if it was possible to make a survey of the Chinese coast, but not to make a survey. Lastly Palmertson instructed Napier not to negotiate with the Qing officials at Canton. If the opportunity presented itself, Napier was to write back home and await instructions. Just before departing, Napier would ask to be supplied with plenipotentiary powers just in case an opportunity to meet the Emperor arose, and was flat out denied this.

Napier sailed off from Plymouth on February 7 of 1834 on the 28 gunship Andromache, taking with him his wife and 2 daughters. While enroute, Napier read all that he could of the 2 previous missions particularly Amherst's notes about the status of China. Napier was excited to read about how Amherst described China as a nation oppressed by an alien dynasty and that the Han people wanted free trade. He became more and more convinced that his idea of sending a single squadron could force the Qing government to open every port in China to britain. He arrived at Macao on July 16 of 1834 and had instructions from Lord Palmertson to go straight to Canton and announce himself directly. This was an error on Palmertsons part as he obviously did not know that all foreigners were supposed to first go to Macao and await Chinese authority to come to Canton. This mistake would lead to terrible results.

OnJuly 23 Napier sailed for Canton and got to the city on July 25. He went to the factory compound at Canton and read aloud his commission to all the British traders.Then he wrote a letter to announce his arrival to the governor general.

The governor general was Lu Kun who refused to accept the letter because Napier had come to Canton unannounced without applying for a permit to enter Canton. Lu Kun said he had no idea why Napier was here, only that he had arrived on a warship and claimed to be in charge of British trade. Lu Kun was aware that Napiers arrival meant the East India companies role was ended in canton and that a new set of regulations for trade were going to be needed. However Lu Kun did not have the authority to establish any new regulations himself without orders from the emperor. So ironically both these men have the same issue. Lu Kun asked Houqua to meet with Napier to sound out the business and report back to him so they could inform Emperor Daoguang. On July 26 Houqua met with Napier and explained that the governor general required a Taipan to communicate and do trade, as they had done in the past. Napier brushed this off and said he preferred to communicate directly with the governor general. Napier ignored Houqua and sent a delegation of british merchants through canton to deliver his letter to Lu Kun. No Qing officials would dare accept the letter and Houqua pleaded with Napier to give him the letter so he could deliver it. Napier was insistent to directly address Lu Kun and refused. The next day, Houqua advised changing the letter into a petition implying Napier into a supplicant status. This greatly pissed off Napier. To add to Napiers anger, Lu Kun did not know what title to use for Napier so he wrote the term "yimu" meaning "headman" which was used for tribal chiefs and Napier's staff translated this out of context to mean "barbarian eye". This came off as derogatory for the British.

Napier was making a large error, he thought he was dealing with China, but in reality he was only dealing with a single individual. That single individual, Lu Kun was in a position that should he disappoint the Emperor he would lose his job. All Lu Kun cared about was following protocol and not accidentally setting any new precedents. He had no authority to negotiate a new system of trade and to even border on that was to lose his job. Any of the former East India company veterans or many of the independent merchants could have easily explained this to Napier, but they didn't. Napier did not trust the former company staff and the independent merchants were vying for new trade negotiations. Napier ended up listening to the council of fellow Scots, Jardine and Matheson. Jardine and Matheson had gone to work on Napier from the very beginning helping him establish himself in Canton.

By august 9th, Napier still was unable to get his letter delivered and was becoming furious. Napier wrote to Palmersson complaining about the situation and that the Chinese were demanding he leave Canton and return to Macao. Napier went on to showcase his personal views "His majesty's government should not be ruled by the ordinary forms prescribed among civilized people. Lu Kun is a presumptuous savage. He was an alien Manchu, like the Daoguang emperor himself whom were nothing more than intruders in the country. The real people of China, the Han Chinese all wanted British trade, it was just this illegitimate government that was holding them back. The Manchus may have been fierce and strong once upon a time, but now after generations of rule they were a wretched people, inconceivably degraded, unfit for action or exertion. The British would be best off using its military power to force the Manchu government to open China's ports once and for all". So in only 3 weeks the man sent to maintain peaceful trading relations was basically calling for war. On August 23 some Qing officials showed up sent by Lu Kun asking when Napier was going to return to Macao and Napier responded he would go entirely according to his own convenience.

Napier felt the trade relations were now threatened and decided to take his case to the people. Napier was certain the independent merchants and local cantonese would rally to him because they all wanted free trade. He began creating posters declaring how"He had been insulted and humiliated by the corrupt governor general Lu Kun whose ignorance and obstinacy were allowing the Hong merchants to shut down Britain's trade at Canton.Thousands of industrious Chinese who live by the European trade must suffer ruin and discomfort through the perversity of their Government. The only thing his people want is to trade with all China, on principles of mutual benefit, and that the British would never rest until they reached that goal". The next day another poster went up, this one made by the Qing "a lawless foreign slave, Napier has issued a notice. We know not how such a dog barbarian of an outside nation as you, can have the audacious presumption to call yourself superintendent". The poster also suggested cutting Napiers head off and displaying it on a stake.

On the evening of september the 4th, as Napier was eating dinner with some guests, servants rushed in to warn him that armed men had appeared at the front gates. Napier went to the gates to see Qing soldiers had surrounded the factory building and an official was nailing an edict from the governor general to the factory wall as he announced the official shutdown of trade and ordered all Chinese employees of the factory to vacate immediately. Soon all the Chinese staff, servants, porters, guards and such left the factory, leaving Napier with just a handful of companions. Napier heard someone in the crowd say he was going to burn down the factory that very night and Napier knew action had to be taken.

Napier called upon his 2 nearby gunboats, Andromache and Imogene, both 6th rate Royal Navy frigates with 54 guns between them. Napier believed under the circumstances he had sufficient reason to defy his orders from Britain and ordered the gunboats to force passage through the Tiger's Mouth. They were to deal with whatever resistance was made upon them and to take up positions in Whampoa and protect British subjects and their property. After ordering the ships off he addressed a letter to Lu Kun and the Hong merchants declaring "you have opened the preliminaries of war. His imperial majesty will not permit such folly, wickedness, and cruelty as you have been guilty of, since my arrival here, to go unpunished". Unfortunately, the British governments actual response to Napiers call for war would not reach Canton until it was far too late. The British governments response was of course, to tell him to back down and to follow instructions and behave. "It is not by force and violence that his majesty intends to establish a commercial intercourse between his subjects and China".

The 2 warships forced their passage through the Tiger's Mouth and exchanged fire with the Chinese forts that guarded it. Napiers 2 frigates unloaded more than 700 rounds into the Chinese forts, 2 British sailors were killed with 5 wounded.The forts were hammered into silence and thus ended what is called the Battle of the Bogue. The Chinese forts lacked the firepower that the British cannons held. The 2 warships proceeded to Whampoa, but the Chinese built heavy obstacles upriver, such as a large cable drawn across the river with hundreds of fire rafts loaded with gunpowder and a fleet of war junks to try and block the passage towards Canton. The 2 warships were not able to get close enough to Canton to be visible from the factories in it. The shock and awe that Napier had wanted to inflict did not come to fruition. The British merchants refused to followed Napiers lead, most simply wanted trade to resume, not a war. Jardine and Matheson were some of the very few who supported Napiers hardline stance, but most asked Napier to obey Lu Kun's orders and to go to Macao immediately. Many of the merchants began to petition Napier complaining how much financial losses he was causing them. Meanwhile Lu Kun made it clear he had zero problems with the merchants, it was Napier alone as to why trade was shut down and that normal commerce would resume the second he left. Napier felt betrayed by his own people and was humiliated.

Napier was quite alone in the empty factory building, out of reach from his 2 gunboats and the Qing were making sure no provisions reached the factory. He realized the consequences if British trade suffered serious harm from his personal actions and coincidentally he was beginning to become quite ill. Thus Napier backed down, on september 21 he ordered the 2 gunboats to pull out and he left Canton a broken man. Trade resumed to normal a fews days after his departure. Britain's first chief superintendent of trade, a proud veteran of Trafalgar and the Napoleonic wars had been brought to his knees by Lu Kun. After a 5 day trip under heavy Qing military escort, Napier arrived in Macao pale and feverish. He died 2 weeks later.

The British public did not mourn the loss of Napier. The Duke of Wellington summed up their views by stating "the attempt to force upon the Chinese authorities at Canton an accustomed mode of communication with an authority of whose powers and of whose nature they had no knowledge had failed, as it is obvious that such an attempt must invariably fail, and lead again to national disgrace". Jardine and Matheson alongside 85 other independent merchants all signed a petition to the new King of England William IV, demanding revenge for Napiers humiliations. Within China the situation was getting worse. Patronage, bribery and embezzlement were becoming the norm among civil officials. Opium was weaving its way through the fabric of Chinese society. In spite of Daoguang's edicts to control the illicit drug the trade was growing exponentially. A major north south land transport route for opium emerged through Hunan province and with it some uprisings sprang up. The Qing government sent military forces to pacify the uprisings but ironically the soldiers that were sent were heavy users of opium and performed terribly. Forces which were sent to opium heavy regions would fall victim to the substance. The Chinese economy was falling into a depression. Grain prices deflated, driving down the income of farmers. Unemployment rose and the Qing government tax revenues were declining. Soon it became expensive to maintain public works like flood control which led to shoddy construction giving way to destructive episodes of flooding. With the flooding came agricultural failures and with that famines.

China's monetary system was collapsing, a major problem was the side effect of the opium trade, the exportation of silver. The Hong merchants paid for the opium with silver, but could not accept silver as payment for tea or silk because it would indicate that they had exported silver in the first place which was illegal. Thus silver was pouring out of China and not coming back in and on top of this, since the 1820 the worlds supply of silver had been coming from mines in Mexico and Peru, but national revolutions in Latin America had shut down those mines. The combination of these 2 factors had a disastrous effect on China.

Silver was the international currency, but copper coins were an important part of China's internal economy. A tael of silver was worth 1000 copper coins during normal times, moving such a large amount of copper was logistically unstable thus silver played a crucial role in China's economy. Silver was the basis of tax payments, a medium for all long distance trade conducted within China and abroad. But copper was used as a medium for the local economies, the marketplace and menial wages. The income and savings for all the lower classes of China, farmers laborers, craftsmen was all paid in copper. As silver flooded out of China it became more and more valuable and this skewed its exchange with copper to the point of absolute mayhem. By 1830 a tael of silver was worth 1365 copper coins and soon it rose to 1600, then to 2000 by the late 1830's. With the inflation came a need for higher taxes, but the lower class could not afford to pay them.

The Qing court debated many ways to remedy the situation. Some said they should merely open ports to appease the traders, some went as far as saying they should simply lift the illegal status of opium so it could be traded accordingly and proper taxes could be levied. In the end Emperor Daoguang increased his hardline stance against opium. Now commoners and soldiers convicted of smoking opium would be punished with 100 lashes and 2 months in the cangue (plank of wood with their hands and neck inside). Even family members of opium users could be punished, such as a father failing to control his children from smoking it.

Now when Britain got rid of the East India Company's monopoly, the responsibility for the conduct of British opium traders in China shifted from the company to the British government itself. The government of Britain tried to pretend the trade did not exist, but the public was learning more and more about it, especially after the Napier affair. Back to Jardine & Matheson's petitions to the king, they demanded a full fledged ambassador, backed up by a war fleet, to demand reparation for China's apparent crimes. More and more letters came to Britain demanding war like action and that just a small force of 2 frigates and 3 or 4 armed vessels could blockade most of the sea trade for the Qing empire. "Intercepting its revenues in their progres to the capital, and taking possession of all the armed vessels of the country". Such actions they argued would not see full scale war, it would just lead to more amenable trade relations. The new man to replace Napier was a longtime East India company man named John Davis. And to their misery he immediately rejected their demand for reparations and was adamantly against their free trade movement. Davis subscribed to the idea that China trade should be conducted with caution and respect. As Jardine & Matheson continuously called for war, Davis sent word back to Palmersson in Britain to ignore them. Davis was far more optimistic that Britain could find a peaceful way after the embarrassing Napier situation. Jardine & Matheson would not quit, and Matheson went back to Britain to drum up support for a punitive expedition against China.

While Matheson held no significant influence over the British government, fortunately Lady Napier did whom he was pushing to rally support for the cause. He used Lady Napier to gain an audience with Lord Palmerston, but as much as he tried to persuade the man, Palmerston like many other officials believed the Canton trade would regain its balance naturally with time and noninterference. Before leaving to go back to China in 1836, Matheson created a hundred page pamphlet titled "the present position and prospects of the British trade with China". The piece argued for the necessity of a british naval expedition to open China or trade would simply come to an end.

Back in Canton, Davis appointed Charles Elliot as secretary to the committee of superintendents. Charles Elliot was a light haired, thin lipped captain in the Royal Navy. In 1830 he was appointed protector of slaves in British Guyana where his job was to investigate the most abusive practices of the British plantation owners and represent the interests of the slaves who suffered under them. The experience hardened Elliot into an abolitionist. Lord Palmerston saw him as a convenient person at the right time to take up the cause in China against opium and had sent him alongside Napier. Eliot was a calculating man, obsessed on how his actions would be interpreted back home in Britain, angling to improve his career. Davis took a strong liking to Elliot, he was flexible and not as headstrong as Napier. Davis also knew he was not expected to hold his position long, the chief superintendent should not be a former company man. Davis wanted to save face and resigned preemptively. When he resigned he lobbied for Elliot to be made the new superintendent. And thus Elliot got the job to his surprise.

Elliot would likewise have a new governor general to deal with, Lu Kun died and was replaced by Deng Tingzhen. They started of on the right foot, Elliot presented his credentials as the new superintendent of trade at Macao and asked for permission to come to Canton. His polite and respectful approach was approved by the emperor and he was welcomed to Canton and took up residence at the old British factory. In Chinese he was referred to as Lingshi "consul" a respectable title that could not be confused with barbarian eye. In november of 1836, just 5 months after Elliots arrival, the Daoguang Emperor issued an edict banning both the importation and use of opium throughout China. Deng Tingzhen proclaimed "The smoke of opium is a deadly poison. Opium is nothing else but a flowing poison; that it leads to extravagant expenditure is a small evil, but as it utterly ruins the mind and morals of the people, it is a dreadful calamity." The crackdown was immense, Qing forces under Deng chased down Chinese smugglers and destroyed their transport ships. They went after dealers on land breaking the supply lines leading the Chinese smugglers to demand higher and higher fees from the foreign traders to transport the opium.

Jardine wrote letters back to Bombay stating the once flourishing opium traffic was falling apart "the Drug market is becoming worse every day owing to the extreme vigilance of the authorities, and we see no chance of amendment". Though Elliot hate the opium trade he knew it was a evil necessity for Britain and feared an outbreak of violence between the Chinese government forces and the increasingly desperate British opium traders. Because the traders were resorting to more dramatic actions Elliot feared the honest traders in canton would soon face consequences because of the opium traders. Then the Hong merchants sent word to Elliot from the Emperor urging him to banish the British opium traders vessels from Canton, but Eliot pleaded that his government never gave him such authority. Elliots orders the Foreign Office were to make sure Britain's drug of choice, tea, made it safely out of China and into the teacups of English drawing rooms for the ritual afternoon tea". They were also to ensure the safety of British subjects in China. Without any authority to stop the opium smugglers he sought action that would at least thwart violence. Elliot wrote to Palmerston in 1837 asking if Britain could make a diplomatic intervention in China to reduce the risk of losing the tea commerce.

Elliot, Deng Tingzhen the Chinese and independent merchants all were under the belief the Emperor was on the verge of declaring opium legalized. Indeed Deng and many other high ranking Qing officials had pressed the case for legalization for quite awhile and the Emperor had been showing a lot of interest in it as a solution for the silver crisis. Elliot proposed sending another ambassador accompanied by a peaceful naval force to argue in favor of legalizing opium. His thinking was that by displaying power, but not guns blazing, could in a respectful manner impress the Qing the importance of the tea trade to both nations. Elliot also had a lot of suggestions for the ambassador. For one that he should inform the emperor that half of the opium was coming from free areas of India that Britain did not control. Also that if Britain stopped its opium traders, other nations would simply fill its space. In light of such logic the only outcome had to be legalization of opium.

Palmerston was aghast, Elliot of all people who was so against the illicit trade was now arguing on the side of the opium smugglers? Palmerston could not agree to such an idea to argue the cause of the smugglers to the emperor no, instead he proposed a "china courts bill" that would grant Elliot formal legal authority over the British subjects in China. He foresaw the creation of a British court of law in Canton, under the superintendent with jurisdiction over all British subjects 100 miles of the Chinese coast. Thus Elliot would have authority both in civil and criminal disputes. Palmerston hoped Elliot would be able to keep the free traders in line and banish the worst offenders, thus appeasing the Chinese. Palmerston never thought such an act would be seen by the Chinese as interfering with their own jurisdiction and authority. The bill was a complete breach of Chinese sovereignty, and thus when it went through parliament it was utterly destroyed.

Meanwhile back on the Chinese side, Deng Tingzhen was continuing to make progress at crushing the opium trade. But then in 1838 a Qing official named Huang Juezi submitted a new method of crushing the opium trade and stopping the loss of silver. His proposal "thus, the way to defend against this calamity, lies not with foreign merchants but with the wicked chinese". He argued it was impossible to block the opium by embargo and it risked foreign trade. To go after the traffickers had proven to be ineffective, because of the extremity of official corruption. Thus they should target the Chinese consumers. As he summed it up "if there were no common users of opium in China then there naturally would be no dealers, no traffickers and no international smuggling trade to drain silver out of China". It was going to be an exceptionally harsh policy, but Emperor Daoguang was intrigued and brought the proposal to the court.

The majority of officials were against it, but the vast majority were also against legalization. One official who was for Huang Juezi's proposal was Lin Zexu the governor general of Hunan and Hubei provinces. Ah yes, for my Chinese listeners or those familiar with Chinese history, one of the most famous figures has emerged onto the stage.

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The British were walking a tightrope between getting their tea fix and not being banned from trade with China because of the Opium smuggling. Silver was flooding back into Britain while being drained from China and enough was enough for the Qing dynasty, now they would wage war on the illicit drug.