How Britain's opium trade impoverished Indians

In Amitav Ghosh's acclaimed novel, Sea of Poppies, a village woman from an opium-producing region in India has a vivid encounter with a poppy seed.

"She looked at the seed as if she has never seen one before, and suddenly she knew that it was not the planet above that governed her life; it was this miniscule orb - at once beautiful and all - devouring, merciful and destructive, sustaining and vengeful."

At the time when the novel is set, poppy was harvested by some 1.3 million peasant households in northern India. The cash crop occupied between a quarter and half of a peasant's holding. By the end of the 19th Century poppy farming had an impact on the lives of some 10 million people in what is now the states of Uttar Pradesh and Bihar. A few thousand workers - in two opium factories located on the Ganges river - dried and mixed the milky fluid from the seed, made it into cakes and packed the opium balls in wooden chests.

The trade was run by the East India Company, the powerful multinational corporation established for trading with a royal charter that granted it a monopoly over business with Asia. This state-run trade was achieved largely through two wars, which forced China to open its doors to British Indian opium.

Historian William Dalrymple, author of The Anarchy, a new book on the East India Company, says it "ferried opium to China, fighting the opium wars in order to seize an offshore base at Hong Kong and safeguard its profitable monopoly in narcotics".

Some historians have argued that the opium business bolstered India's rural economy and kept the farmers happy. That was not the case, as new research by Rolf Bauer, a professor of economic and social history at the University of Vienna, has found.

For years Dr Bauer trawled through archival documents looking at the costs of producing opium and paying money to farmers.

He also examined an exhaustive history of the trade - the 1895 Report of the Royal Commission of Opium, which ran into seven volumes and 2,500 pages.

It contained 28,000 questions and hundreds of witness reports on the use and consumption of opium in India, and studied how the colonial government regulated its production and consumption.

The result of the research is published in Dr Bauer's new study of the trade, The Peasant Production of Opium in Nineteenth-Century India. His conclusion: the opium business was hugely exploitative and ended up impoverishing Indian peasants. "Poppy was cultivated against a substantial loss. These peasants would have been much better without it," Dr Bauer told me.

This is how the East Indian Company ran the trade. Some 2,500 clerks working in 100 offices of a powerful colonial institution called the Opium Agency monitored poppy farmers, enforced contracts and quality with police-like authority. Indians workers were given commissions on every seer - a traditional unit of mass and volume used in large parts of Asia - of opium delivered on their beat.

In the thriving, state-run global trade, exports increased from 4,000 chests per year at the beginning of the 19th Century to more than 60,000 chests by the 1880s. Opium, says Dr Bauer, was for the large part of the 19th Century, the second-most important source of revenue for the colonial state. It was only outmatched by land taxes. (India remains the world's biggest producer of legal opium for the global pharmaceutical market.)

"The government's opium industry was one of the largest enterprises on the subcontinent, producing a few thousand tons of the drug every year - a similar output to Afghanistan's notorious opium industry today, which supplies the global market for heroin," Dr Bauer says.

More importantly, the crop, he adds, had a "lasting negative impact on the lives of millions".

Interest-free advance payments were offered to poppy farmers who could not access easy credit. By itself, this was not a bad thing for those producing for the global market.

What made it bad for them, according to Dr Bauer, was what they paid for rent, manure, irrigation and hired workers was higher than the income from the sale of raw opium.

In other words, the price peasants received for their opium did not even cover the cost of growing it. And they were soon trapped in a "web of contractual obligations from which it was difficult to escape".

Stiff production targets fixed by the Opium Agency also meant farmers - the typical poppy cultivator was a small peasant - could not decide whether or not to produce opium. They were "forced to submit part of their land and labour to the colonial government's export strategy".

Local landowners forced their landless tenants to grow poppy; and peasants were also kidnapped, arrested and threatened with destruction of crops, criminal prosecution and jail if they refused to grow the crop. "It was a highly coercive system," Dr Bauer says.

By 1915 the opium trade with China, the biggest market, had ended. However, the British Indian monopoly on opium continued until India won independence in 1947. What confounds Dr Bauer is "how a few thousand opium clerks controlled millions of peasants, forcing them to produce a crop that actually harms them".

It's a good question.

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