Empire of Crime: Opium and the Rise of Organized Crime in the British Empire

INTRODUCTION

‘It is not the man who eats the opium, but the opium that eats the man.’

– Chinese Mandarin maxim

SOMETIMES THE BEST INTENTIONS CAN lead to the worst results. When Great Britain took the moral high ground and agreed to end its lucrative export of opium from Imperial India to China in 1908, it unleashed a century of criminality. Just as America’s misguided Prohibition of alcohol made illicit fortunes for the Mafia, so organised crime within the British Empire grew rich on its trade in illegal narcotics in the twentieth century.

Victorian Prime Minister William Ewart Gladstone had predicted this would happen when he argued in Parliament against the abolition of the imperial trade in opium. ‘An enormous contraband trade will grow,’ he told well-meaning Liberal politicians. ‘Does not my honourable Friend see that, supposing he could stop the growth of opium in the whole Indian peninsula, his measure would immensely stimulate the growth of it in China?’

This book is the first to reveal the full extent and variety of organised crime within the British Empire and how gangsters exploited its global trade routes to establish a new age of criminal networks that spanned the world. They even took the liberty of using the very weapons of imperial power – Her Majesty’s Royal Navy – to smuggle drugs from continent to continent. HMS Belfast – now an iconic museum ship moored in the River Thames – was once packed with Triad narcotics from Hong Kong intended for distribution in America.

Illicit guns were smuggled along ancient trade routes made safe by the British Empire – through the Middle East, across the Persian Gulf, to Afghanistan and India. Most of these weapons were supplied by European arms manufacturers, greedy for profit, who did not care where the guns ended up. Some of the guns were even bought with money given by the Imperial Indian government to border tribes to ensure their loyalty. ‘So that we not only supplied the tribesmen with arms of British manufacture,’ concluded one cynical veteran of the North-West Frontier, ‘but we gave them the money to buy them!’

The imperial prohibition of opium trading caused great tension between the government in London and its colonial governors, who had to deal with the messy outcome of these good intentions. Chinese refugees fleeing civil war in the mainland presented a major problem to Sir Cecil Clementi, Governor of Hong Kong in the 1920s. Faced with a shortfall of opium to meet the needs of thousands of new addicts, he knew that something dramatic had to be done. Rather than seeing the opium trade fall into the hands of criminal smugglers who had no incentive to control the consumption of opium, Sir Cecil took the unconventional initiative of becoming a major dealer himself.

In defiance of the British government’s own anti-drugs stance, Sir Cecil organised the purchase of large quantities of opium directly from Persia to dump on his home market and put the smugglers out of business. He even entered into negotiations with other colonies to supply them with much-needed opium, too. It was an extraordinary experiment and Sir Cecil noted with delight the dramatic fall in opiumrelated crime in his own colony; but the Whitehall bureaucrats couldn’t put up with this for long and demanded he cease dealing in the drug.

If Britain had handed a great gift to organised crime, it also took on the burden of pursuing the purveyors of this new evil. Principal among these innovative drugs-busting investigators was Russell Pasha, Commandant of the Cairo Police and founder of the Central Narcotics Intelligence Bureau. Seeing the damage caused by a new wave of opium-derived drugs, especially heroin, on the streets of the Egyptian capital, he set about pulling together evidence of a vast international network, linking East with West. His agents exposed the opium fields guarded by narcotics warlords and tracked down the corrupt pharmaceutical companies in Western Europe who were happy to sell thousands of kilos to ruthless master criminals.

With the coming of the Second World War and its aftermath, political pressures further complicated the world of organised crime within the British Empire. Japan funded its invading armies with profits from criminal enterprises, while anti-colonial movements blurred the line between terrorism, freedom fighting and racketeering. Gangsters aligned themselves with whichever party protected their crooked assets. Sometimes colonial policemen were drawn into the underworld and had doubts about whether they were really on the right side.

‘I began to wonder if I was getting a kick out of my business,’ said 22-year-old Inspector Drummond of his undercover battle against the Kenyan Mau Mau Rebels. ‘I used to tell myself it was a nasty job that had to be done, that after all I was only doing my duty, and that the important thing was I should do it well. But did all of them have to die?’

In Hong Kong, Inspector Wallace agonised over the everyday corruption around him. ‘I sometimes feel that it is all rather a bad dream,’ he said. ‘Even if I leave this colony penniless and in disgrace, at least I shall take my principles with me – and these are more precious to me than anything else.’

The story told in this book for the first time is one of high principles challenged by evil conspiracies, of moral crusaders tested by mobster realities. At the heart of it is an extraordinary global empire seeking a mission for good but derailed by criminal gangs and monstrous illegal profits. Empire of Crime is the dark underbelly of our colonial history.

1

THE UNFORTUNATE MR HARTLEY

IT IS NOT A GOOD idea to take on the British Empire, especially when it has chosen to pursue the righteous path and correct past errors. John Hartley – Englishman, Freemason, Conservative, drug dealer – found himself in just this precarious situation on 6 April 1878.

Standing up in a court in Yokohama, Japan, Mr Hartley faced both Her Britannic Majesty and Motono Morimichi, Superintendent of Japanese Customs. They accused him of smuggling opium into Japan in contravention of the treaty between their two great countries. Hartley argued that the opium was purely for medicinal purposes, but the judge was unimpressed.

‘I find that no opium can properly be called medicinal opium unless it contains at least six per cent morphia [morphine]. The evidence shows that the proportion of morphia in it falls far short of the standard.’

The judge admitted that there was some discrepancy between the tests on the sample opium by two different experts, but he felt that was beside the point.

‘Not only do I find that the opium in question is not medical opium, I find that it is smoking opium,’ he explained. ‘The opium used in China for smoking is mostly Indian opium. The flavour of Indian opium, which renders it less palatable a medicine, renders it all the more palatable for smoking, and the absence of morphia, which makes ordinary Indian opium useless as a medicine, is no disadvantage of smoking, if it is not a distinct advantage.’

Hartley was found guilty of smuggling Indian-produced smoking opium into Japan, had his drugs confiscated and was fined $165. But Mr Hartley would not let it rest there. He was aggrieved at being publicly humiliated and losing what he considered his lawful business, thanks to a Japanese boycott of his goods. He demanded an appeal of the judgement. He was a legitimate trader of medical drugs, he insisted, but the judge refused to grant a rehearing of the case.

The following year, Hartley fell ill and blamed the stress caused by the Japanese government continuing to ban his drugs importation business for his poor health. He was losing money and credit and was advised to return home to England. In London, he had sealed samples of his Indian opium tested by the Pharmaceutical Society of Great Britain to prove they were of medical quality. They agreed that the samples contained more than the required amount of morphine.

Triumphantly, with this evidence in his luggage, Hartley took a succession of trains to the Italian port of Brindisi, where he caught a steamer to Alexandria in Egypt and then on to Bombay. Along the way, he continued his correspondence with various experts, building up his body of proof that his opium was high-grade medical Indian opium and not at all destined for some grubby smoking den. After four and a half months’ travelling, he arrived back in Yokohama in March 1880.

Tragically for Mr Hartley, Her Majesty’s chargé d’affaires was unimpressed by Hartley’s tests and the testimonials from several experts. He would not help him contest the Japanese government’s decision to boycott his business and claim back some recompense for his lost income. His health now took a further turn for the worse and he feared he was being poisoned by the Japanese government.

After just a week in Japan, he was sent back on the steamer Malacca on a voyage that took just under two months. He arrived home to more bad news. His father-in-law and brother-in-law refused to allow him access to his wife and children. His lack of money was the principal barrier, they said, and told him that the process of contesting the court judgement in Japan had unhinged him mentally. But Hartley’s sense of injustice went beyond the loss of his family and sanity, and he continued to press on to clear his name.

In 1885, as Hartley was on the way to the Privy Council Office in London for public funds to pursue his case, he was arrested by a court bailiff. He was confined to Surrey County Prison in Wandsworth for two weeks for debt accrued by not paying a food bill for his wife.

In the meantime, Hartley’s case had been seized upon by the Anti-Opium Society and an MP stood up in the House of Commons to denounce Hartley as a drugs smuggler. Pamphlets quoting him as an example of the evil of the opium trade were distributed throughout London from the Egyptian Hall in Mansion House. If that wasn’t bad enough for his reputation, stories critical of Hartley were carried across the Atlantic and appeared in US journals.

Further bad news for Mr Hartley came on 24 June 1886. He had asked for the British government to intervene on his behalf but, in response to a question asked in Parliament, the Under-Secretary of State for Foreign Affairs said: ‘The case of Mr Hartley is well known to Her Majesty’s Government … and my predecessor stated that successive Secretaries of State had arrived at the conclusion that Mr Hartley’s case was not such as to justify diplomatic interference.’

In 1888, a full ten years after he had first appeared in court in Yokohama, Hartley was morosely wandering around the Bethnal Green Museum in London’s East End when he saw a display of Indian medical opium. The samples contained less than the percentage of morphine required by the judge in Japan. Aha, he thought, I was right all along!

In 1890, he was back in Japan, making claims against the Japanese government for illegal acts. He accused them of singling him out for prosecution when German and Dutch merchants were allowed to import similar powdered opium. He claimed that the expert chosen by the Japanese to analyse his opium was in their pay. Above all, he accused the British government of doing nothing to help him in order to please both the Japanese and the Anti-Opium Society.

From Yokohama, he wrote: ‘I again beg that the patriotic members of the Community will help me to get out of this country that I may through a member of the Parliamentary Opposition thrash the present government into something like fair play to me and my wife and family, who are robbed.’

But still no one would listen to him and still Hartley would not give up his fight. In July 1897, nearly 20 years after the original case and now living alone in a suburban road in Croydon, he fired off an angry letter to the Prime Minister, the 3rd Marquess of Salisbury.

‘My Lord,’ he wrote, ‘I submit that it is time that our boasted civilisation as a powerful nation should possess the dignity and honour of protecting Englishmen against a Government [of Japan] that is mean enough to boycott him in their Departments of State and Law Courts.’

As an afterthought, he added, ‘Sir W. Grantham when QC, MP, wrote me Why don’t you bribe them, Mr Hartley?’

Well, indeed, it was a very good point. It would have saved him an awful lot of money, not to mention the loss of his family and his sanity – but then again, it wouldn’t have been very British …

The British Empire made a vast sum of money from the exportation of opium from India to China – and it wasn’t for medical use, but intended to feed the habits of millions of addicts. In today’s terms, it was as though Colombia was part of an American Empire and New York traders were raking in fortunes from selling cocaine to Europe.

Opium was a popular recreational drug in China in the early nineteenth century. Much of it was obtained from India, where it was swallowed as tablets or drunk as opium-infused water. The Chinese refined its consumption by smoking it, making the high even more intense. When the British East India Company took over trade in India, its members were keen to find a commodity that the Chinese wanted as much as the British wanted their tea. The imbalance in trade between Britain and China because of tea had bothered British merchants for many years, draining English coffers of the silver needed to pay for it. And so they started to trade in small consignments of Bengali-farmed opium sold to Chinese coastal merchants.

As the Chinese demand for opium grew, so did concern at its deleterious effects. The Chinese government of the Qing Dynasty (also known as Ch’ing or Manchu) introduced a succession of bans on its importation, but British merchants got round them by selling their goods to independent middlemen, who smuggled the drug into China. It was too profitable not to. The beneficiaries included Chinese customs officials and bureaucrats, who grew rich on tariffs and kickbacks from the Chinese merchants selling the drug to their population.

Opium was sold at auction in India for four times the amount it cost to grow and process it. Between 1806 and 1809, British traders received seven million silver dollars for opium. At a stroke, it reversed the trade imbalance in tea and made members of the East India Company rich – but this was just the beginning of a narcotics boom. The price of opium was high in China and was enjoyed only by the wealthy classes. At first, this suited the British traders just fine because they didn’t want to rock the boat by flooding the Chinese market. But then economic demands pressed them to go further.

The rise of factory-produced cotton, sold from Britain to India, meant that Indian merchants needed to find cash to pay for it, and they turned to opium, encouraging a dramatic growth in its production and a subsequent fall in price. British merchants wanted to increase the amount of opium going into China, but the Chinese only permitted its import through Canton, so that they could control it. In 1833, the British government ended the East India Company’s monopoly of trade with China, allowing any Englishman to trade with the Heavenly Kingdom. One of the new companies was Jardine, Matheson & Co.

Dr William Jardine and James Matheson were both Scotsmen who broke away from the East India Company to establish their own immensely lucrative trade in opium and other commodities with China. From their base in Hong Kong, they grew so rich that when James Matheson retired back to Scotland he bought the Isle of Lewis for half a million pounds and built a castle on it. Jardine became an MP and built a magnificent townhouse at 6 Upper Belgrave Street near Buckingham Palace, as well as having his own castle in Perthshire. The multinational corporation known as Jardines still thrives today.

The opium trade rocketed from 18,000 chests to 30,000. One chest of raw opium balls weighed roughly 140 lb. Each chest could sell for £100. In contrast, a policeman in Victorian England might earn £1 a week.

As the opium habit spread among the Chinese middle classes, alarm bells began to ring and the Chinese government feared a breakdown in society, as millions of their formerly productive citizens drifted away from work on opium binges. The Qing Emperor appointed a no-nonsense commissioner, Lin Zexu, to end the trade by closing ports to British ships and seizing opium. British ships were boarded in international waters and their cargo destroyed. The rapidly escalating animosity culminated in the outbreak of the First Opium War in 1839.

In an act of aggression that still angers the Chinese today, British imperial warships backed up the demands of British traders to open up Chinese ports to their goods, including opium. With far superior military technology, the British captured Canton, blew up Chinese ships and humiliated the Chinese Emperor. The subsequent Treaty of Nanking allowed the British to trade in four ports, gave them special privileges and ceded Hong Kong to Queen Victoria. The USA and France soon after concluded similarly beneficial trading treaties with China.

Not everyone in England was impressed by the outcome. The Times thundered at the opium trade foisted on the Chinese. Its editorial argued that Britain should wash its hands of the business – ‘that we should cease to be mixed up in it, to foster it, or to make it a source of Indian revenue’.

We owe some moral compensation to China for pillaging her towns and slaughtering her citizens in a quarrel which never could have arisen if we had not been guilty of this national crime.

A young William Ewart Gladstone MP – a future prime minister – had just come back from a trip to Italy with his beloved sister. She was hooked on opium-based laudanum and suffering terribly from her addiction. Furiously, he condemned the opium war in the House of Commons. When an opposition MP boasted of his pride at seeing the British Union flag flying over a burning Canton, Gladstone was scathing.

We all know the animating effects which have been produced in the minds of British subjects on many critical occasions when that flag has been unfurled in the battlefield. It is because it has always been associated with the cause of justice, with opposition to oppression, with respect for national rights, with honourable commercial enterprise, but now that flag is hoisted to protect an infamous contraband traffic, and if it were never to be hoisted except as it is now hoisted on the coast of China, we should recoil from its sight with horror …

The Foreign Secretary, Lord Palmerston, countered this crusading anger by pointing out that Chinese aggression towards British merchants had been motivated not by concern for their people’s morality but because of their ballooning trade deficit with Britain.

As China suffered terribly during the civil war of the Taiping Rebellion, Britain continued its lucrative trade in opium. Conflict broke out again between the two countries when Qing officials searched a Hong Kong-registered ship in 1856. The British retaliated by seizing Canton. France joined in and both nations’ troops marched on Beijing, burning down the Emperor’s Summer Palace. In no position to fight off a modern European army, the Chinese ratified their earlier trade treaty, opened up more ports and paid millions of ounces of silver to Britain and France for their trouble.

Lin Zexu had tried to conduct an anti-opium campaign within China, arresting hundreds of local dealers and destroying their drugs, but in the wake of the Second Opium War, the trade took another leap skywards. Opium imports increased from 58,000 chests in 1859 to 105,000 chests in 1879. To ensure that the money flowed smoothly, the British took over the running of the entire Chinese customs service, putting it under the control of Sir Robert Hart and his staff of 89 Europeans, half of whom were British. As the London Economist of 1898 commented: ‘The Customs Houses of China are within reach of British shells.’

The British government was becoming addicted to its opium profits. It has been estimated that between one-fifth and one-sixth of the British Indian Exchequer’s income came from the business. But still there was a vociferous group that could not accept the legitimacy of the trade.

Sir Wilfrid Lawson’s money came from railroads. He was director of the Maryport and Carlisle Railway. Becoming Liberal MP for Carlisle in 1859, he quickly gained a reputation as a vigorous campaigner for temperance. His style was passionate and radical. He had campaigned for the abolition of the House of Lords and disarmament, and it was natural for him to express outrage at Britain’s continuing part in the opium trade.

In May 1870, the 41-year-old Lawson stood up in the House of Commons and argued for the motion ‘That this House condemns the system by which a large portion of the Indian Revenue is raised from Opium’. At the heart of his argument was the belief that what is morally wrong can never be politically right. He explained that the government of India had changed since the days when it was in the hands of East India Company merchants and that the British government now took a more direct role in the administration of the country.

‘Above all,’ he said, ‘I rejoice to say that the old-spirited foreign policy, which consisted, as far as I could understand it, in bullying the weak and truckling to the strong, is dead – I hope never to revive again.

‘The House must understand that this opium, as prepared and sold by the Indian government, is not medical opium; it is not a drug intended for the soothing of men’s pains and sufferings.’

Quoting a medical expert, Lawson claimed that the majority of opium smokers ‘advance rapidly towards death, after having passed through successive stages of idleness, debauchery, poverty, the ruin of their physical strength, and the complete prostration of their intellectual and moral faculties. Nothing can stop a smoker who has made much progress in the habit.’

Lawson rounded on the assembled MPs and pressed a guilt button that made some nod their heads and others bristle with indignation: ‘Slavery was not productive of more misery and death than was the opium traffic, nor were Britons more implicated in the former than in the latter.’

Lawson believed that the British Empire should be a vehicle for spreading goodness in the world, not evil. He feared that the result of the Opium Wars was a growing hatred for the British in the Far East. ‘We carried on the war in the most horrible manner,’ he said, ‘and, among other outrages, perpetrated the greatest piece of vandalism of the present century, in burning and looting the Emperor’s Summer Palace.’

Lawson gestured towards the leader of his party, sitting on the front bench. Sir William Ewart Gladstone, now sixty-one years old, had become Prime Minister of Great Britain just two years before and now had the power to enact his earlier beliefs. Lawson reminded the senior politician of his youthful anger at the First Opium War and quoted him directly: ‘A war more unjust in its origin, a war more calculated in its progress to cover this country with permanent disgrace, he did not know and had not read of.’

Gladstone sat impassively, staring at the Opposition waving their papers at him, taunting him about his past comments. Lawson was in full flow and described the difficulties now faced by Christian missionaries in China. He read out a letter describing the hostility experienced by Protestant missionaries, one having been chased out of a city in Hunan by a mob, its leader saying, ‘You burned our palace; you killed our Emperor; you sell poison to the people; now you come professing to teach us virtue.’

Lawson said that some claimed the opium trade was no worse than selling alcohol at home. ‘All I can say is, that two blacks do not make one white.’ And there was a major difference between Britain’s manufacturers of gin and what was happening in the Far East. ‘The government themselves are the dealers in opium; they grow the opium, and sell it to the highest bidder.

‘But the real argument is this – the Indian government says it wants the money, and has no other way of getting it.’ Looking down at his notes, Lawson quoted a Treasury Minister who had produced a pamphlet on the subject. ‘Prevention of the trade is a sacrifice to morality so great, said the Treasury Minister, "that we hardly ought to impose it on our Hindoo [sic] subjects until we have washed our hands clean by ceasing ourselves to manufacture gin. Until then England surely has no right to force India to be more moral than itself, unless it is prepared to make up to India out of the English taxes the £4,000,000 which this morality would cost."’

Lawson was coming to the end of his speech.

‘I am not calling upon the Government immediately to disarrange all their Indian finance. I know it is impossible for them to act at once on any such Resolution; and I am not bringing a railing accusation against any Ministry or against any party. I believe that we have all been guilty.

‘We have all suffered this evil to go on too long. It is time to put a stop to such an evil and all I ask this House to declare is that they are ready to sustain Her Majesty’s Government in carrying out an Eastern policy more in accordance with the claims of justice, humanity, and national morality.’

It was a bravura performance from Lawson that conveyed exactly the strong sense of moral purpose shared by many senior figures in Victorian Britain. The immense wealth and power brought to their shores by the Industrial Revolution and the British Empire could only be acceptable if it was used for the good of mankind as a whole – not just the benefit of greedy Brits. It was an emotional and philosophical argument that grew stronger through the rest of the century.

But in the crowded chamber of the House of Commons on that May evening, someone had to speak out for the realities of imperial survival and that person was Grant Duff. A 41-year-old Aberdeenshire lawyer by training, he was the Undersecretary for India in Gladstone’s government and had full access to the figures.

‘The net average amount of our Opium Revenue during the last five years, for which the accounts had been laid before Parliament, was £5,781,890,’ Duff told the MPs. ‘In the year 1867–8 – the last for which the accounts had been laid before Parliament – it rose to the great total of £7,049,447, after all expenses had been paid. In short, it amounted to between one-fifth and one-sixth of our whole net Revenue.’

The figures raised eyebrows. It was not the sort of sum of money you could easily say ‘no’ to.

‘Unlike most items of national Revenue,’ Duff told the House, ‘these millions were not the product of a tax upon our own subjects … They were a contribution paid chiefly by China, partly by the Indo-Chinese Peninsula and the Eastern Islands, to help us to make India what we desired her to be, and what, if rash hands did not interfere, she might well become – one of the most prosperous portions of the earth’s surface.’

To Duff and the architects of the British Empire, it seemed a rather neat transaction that an opium-addicted Chinese middle class should pay for Britain’s upkeep of India.

‘Was it worth seriously discussing – was it conceivable,’ wondered Duff, ‘that the British taxpayer – not too lightly burdened already – would allow himself to be mulcted to the tune of some £6,000,000 annually in order that he might pay a benevolence to India? If we were to give up the powerful lever for raising the position of India which this opium Revenue gave us – if we were to give up the better part of our golden dream of improvement and civilisation – would it not be wise to reconsider the whole question of our connection with India?

‘To put it plainly, if at one blow the opium Revenue was struck away, the Indian Empire would be on the high road to bankruptcy.’

Duff then explained the machinery of the opium business to the House. The Indian government received three sources of income from