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Between 1820 and 1840 the British sold a lot of Opium in China. Compared with the total size of the British Empire's economy, how big was the Opium trade?

I have an old friend who maintains that even though the industrial revolution was in progress, that 50% of the British Empire Income in 1825 was from illegal Opium sales in Qing China. (He also maintains, no illegal drug dealing = no industrial revolution! Not part of the question though)

I find 50% that hard to believe, but I think it must have been significant. This source says:

In the fifty-year period from 1842-1880 opium revenue on average was 15% of India‟s total revenue, which is significant for a single commodity.

I'm interested in the earlier period of Opium trade. I have poked around, but haven't seen any quantitative estimates of how big the Opium trade was relative to the total economy of British Empire.

Edit: By "total economy of the British Empire" I mean something similar to the GDP of all the economic activity in India, England, Ireland, Wales, Scotland, Gibraltar, Australia, Burma, Canada, Jamaica, etc. All the economic area under the crown, if you will. In this chart it looks like in 1870 50% of the British economy was India, and 40% was UK. The correct answer will have as chart element like this for the whole British Empire in the 1820s, with a % for "opium"

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    According to this site, in 1839, "the profits from the opium trade still accounted for 40% of the total value of Indian exports [of the Honourable East India Company]". Your friend may be confusing the British Empire with the HEIC in this instance. – sempaiscuba Nov 17 '17 at 14:46
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    I think you (and your friend) need to be more specific on just what you mean by "the British Empire's economy". Do you mean the British government's tax revenue, or the total economy? – jamesqf Nov 17 '17 at 19:23
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    And perhaps I'm picking a nit here, but in what way was selling opium to China (or anywhere else) illegal? – jamesqf Nov 18 '17 at 6:42
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    @jamesqf And the Chinese government, which had legal jurisdiction over China, had restricted trade to Guangzhou. It is my understanding that much of the Opium imports circumvented licensed traders as well; it was actual smuggling. – axsvl77 Nov 18 '17 at 17:36
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    @jamesqf From a British standpoint, the export of opium from India was legal (as was its import into the UK at that point). The trade with China was outside British jurisdiction, and as such, not subject to British laws. – sempaiscuba Nov 18 '17 at 19:58
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There is no doubt that opium and tea formed a "commercial nexus" that became an essential element of the British imperial economy. Although the British government wasn't directly involved in the opium trade, import duties on tea provided 10% of British tax income. Sales of opium generated about one seventh of the revenues of the British East India Company in India [Robins, 2012, p156], and those revenues were used to pay for the tea that was sent back to Britain.

The table below shows the opium exports from India to China (in chests):

opium exports to China

[Ibid, p157]

As you can see, the opium exports over the period that you are interested in, while nowhere near their peak, were nevertheless substantial.

In terms of profits, according to this site the approximately 24,000 chests of opium exported by the company in 1839,

"accounted for 40% of the total value of Indian exports [of the Honourable East India Company]"

The figure for 1825 was approximately half that exported in 1939, so it seems unlikely that it would have amounted to 50% of the Honourable East India Company's profits (never mind the profits of the British Empire as a whole!).

However, the Wikipedia page on the HEIC states that by 1825:

most of the money needed to buy tea in China was raised by the illegal opium trade.

This will help us estimate the contribution of the opium trade to the GDP of the British empire.


If you are interested in exact figures for the trade between India and China at that time, the UK government published a series of papers titled "Papers Relating to the Trade with India and China: Including Information Respecting the Consumption, Prices, &c. in Foreign Countries" in 1829 which should include the detail you're after.


For the British Empire as a whole at this period, the 1833 book Taxation, Revenue, Expenditure, Power, Statistics, and Debt of the Whole British Empire; Their Origin, Progress, and Present State by Antonio Pebrer provides valuable details. Happily, this particular volume has been scanned and made available from Archive.org.


From the above sources, we can attempt an answer to your question. (Please note that this answers the question as originally asked, rather than the later edits)

Estimates for the GDP of the British Empire vary widely. If you are interested in a discussion of the various methodologies that have been tried, there is an excellent discussion in What Was the UK GDP Then? A Data Study. Two examples quoted there are Deane and Cole (1967), who gave the following estimates:

  • 1821 £291 million
  • 1831 £340 million

and Veverka (1963) who, using a different methodology, obtained the following:

  • 1820 £403 million
  • 1830 £438 million

(quoted in What Was the UK GDP Then? A Data Study p34)

The East India Company Act 1813 opened up trade with India, but reserved commerce with China to the Honourable East India Company. The quantity of tea exported from the port of Canton by the East India Company in 1825/26 was 27,821,121 lbs. That was valued at £1,729,949 [Papers Relating to the Trade with India and China, p 47].

Since we already know that most of the money needed to buy tea in China in 1825 was raised by the illegal opium trade (see above), this also gives us a rough figure for the East India Company's revenue from the opium trade.

If we assume a roughly linear growth in GDP, then, based on the estimates above, the GDP of the British Empire in 1825 would have been something between £316 million and £420 million.

Assuming the mean value of £360 million, then the value of the opium trade was just under 0.5% of the GDP of the British empire in 1825.


To provide some further context for these figures, the value of exported cotton in 1825 was £30,155,901, which generated a tax revenue of £2,040,718 [Pebrer, 1833, p341].

Trade with British West Indian colonies in 1831 was valued at just over £18.5 million [ibid, p396]. African commerce was valued at just over £1 million [ibid, p419], and trade with "all places eastward of Cape Hope (except CHINA)" was some £10.9 million [ibid, p457].


The estimated total capital of the British empire in 1833 was estimated to be £3,679,500,000 [Pablo, 1833].

At that time, the East India Company was valued at £41,484,354.


If anyone feels inclined, most of the the figures required to generate a table - as requested in the later edit to the question - should be available in the sources listed below.


sources

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    I'll try to add sources with figures for revenues/profits of the British Empire at that time (and also sources for the value of the Chinese tea trade in 1825) later, when I can get a decent Internet connection. – sempaiscuba Nov 17 '17 at 16:07
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    @GeorgeChen In terms of direct taxation, the British government weren't directly involved in the profits from the opium trade at all. They taxed the imports of tea (which the HEIC paid for with opium). The lion's share of the profit went to the HEIC (& its shareholders), which is what allowed it to maintain its private armies etc. Indirectly, of course, the British government gained enormously, but the exact amount would probably be impossible to quantify accurately. – sempaiscuba Nov 17 '17 at 17:29
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    As sempaiscuba alludes, I don't believe this answers the question asked. While HEIC may have been British, and may have accounted for a (large) part of the overall economy of Great Britain, the question was about the Nation's economy, this answers the Company's. – CGCampbell Nov 17 '17 at 18:16
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    @CGCampbell Actually, the question asks about the empire rather than the nation. As stated in the answer, at that time, taxes on tea provided 10% of the UK tax income. But the UK gained wider benefits indirectly, which is why I included links to the related texts. – sempaiscuba Nov 17 '17 at 18:22
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    Fine but the substantive point of @CGCampbell's comment was that the question isn't about the HEIC. – David Richerby Nov 17 '17 at 19:27

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