Spain and the Opium Trade in East Asia

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A Review of La Participación Española en la Economía del Opio en Asia Oriental tras el Fin del Galeón (The Spanish involvement in opium economy in East Asia after the Manila Galleon), by Ander Permanyer-Ugartemendia.

Tracing Philippine-Spanish participation in opium trade during the early nineteenth century following the end of the trans-Pacific trade monopoly, Ander Permanyer-Ugartemendia eloquently sets the record straight for a popular topic in world history – so far mainly addressed from an Anglo-centric perspective. His doctoral thesis can be characterized as at least three things: (a) as a corrective of Spanish economic performance and private trade in Asia, (b) as a contribution to understanding the financing and loan patterns of trans-regional investments of the time, and (c) as a synthesis of commercial activity based on networks among Western trading companies, private merchants, and their human resources. In short, the thesis challenges both macro and micro aspects of economic history: it sharpens common views on how early nineteenth-century transnational trade patterns shaped the global market and at the same time offers details on business correspondence and individual deals. Thus even the footnotes of this extensive work cover far more aspects than its title suggests. Permanyer-Ugartemendia’s approach, which leaves no doubt about his familiarity with the multilingual state of the art of the field, contributes to the long anticipated study on nineteenth century Spanish merchants in Asia and the dynamics of international trade in Manila after the end of the Manila Galleon trade and consequent cuts in silver flows from the Americas via Manila to China.

Ander Permanyer-Ugartemendia defines the aim of his study as localizing and measuring Spanish initiatives in East Asia’s opium economy during the first decades of the nineteenth century. The importance of the Spanish increased simultaneously with growing European trade in China during the 1820s and its more regular nature during the 1830s. According to the author, Spanish “opium activities” changed along with the economy in the region, thus did not develop in a linear way but rather split up in three separate cycles: (1) the end of the Manila Galleon trade, c. 1815; (2) the mid-1820s when trading families connected Calcutta, Canton, and Manila; and (3) the 1830s with creole Philippine participation and quests for new businesses opportunities.

In roughly 500 pages, Ander Permanyer-Ugartemendia unravels the complex engagement of Spanish merchants in the global opium business. The dissertation is divided into two parts and consists of a total of seven chapters. In Part 1 the author combines secondary research and archival data. In Chapter 1 (La Qing China y la presencia europea en Asia) he provides a solid context covering the changing nature of commerce in the South China Sea region together with political, economic, and moral aspects of Qing China’s reaction to opium imports.

Chapter 2 (Los españoles en Asia y el Pacífico) synthesizes the economic constraints of the colonial Philippines towards the end of the eighteenth century against the background of an expanding British Empire and the changing nature of maritime trade in the East. It discusses Bourbon Spain’s economic reforms in response to decreasing silver flows from the Americas including the belated formation of the Real Compañía de Filipinas (Spanish Royal Philippine Company, RCF). The reader learns how this first Spanish joint stock company, whose scope of manoeuvring remained restricted to economic (not political) issues, reacted to fierce Western competition in the China Seas.

Chapter 3 (El opio en Asia Oriental) sheds light on the import patterns of Indian opium to Qing China. Addressing the Chinese side, the author draws attention to social aspects of opium consumption. He shows how opium smoking was already common in Overseas Chinese communities several decades before it spread across China during the second half of the eighteenth century. Yet with British control over opium production in Bengal, the number and amount of opium cargoes shipped to China increased enormously. The same chapter traces the geographical spread and the increasing quantity of opium consumption in China among the urban population, as well as the imperial court’s anti-opium legislation. By the nineteenth century, when country traders flooded China with thousands of chests of Bengal opium, the narcotic had turned into a universally present element of Chinese society. It was to be found at most social gatherings and cultural events and had turned into “a collective experience” (p. 147). The combination of observations like this and undeniable hard facts enabled the author to successfully demystify opium-related, dark chapters of Qing China’s political and social decay.

Part 2 (Las actividades) covers the actual Spanish role in opium trade at the turn of the eighteenth to the nineteenth century. Here we encounter historical scholarship at its best. Elaborating on a wealth of primary sources located in archives and libraries in Spain, France, the United Kingdom, and the Philippines, Permanyer-Ugartemendia unravels the far-reaching private initiatives of Spaniards (casas privadas) in Calcutta and Canton. Chapter 4 (El “enlace español” tras el fin de Galeón) opens with an analysis of the period between the end of the trans-Pacific galleon trade and the independence of Mexico against the background of the vast expansion of the Philippine trade. This chapter sheds light on the role of the RCF, which officially never participated in opium trafficking. Yet, one of the dissertation’s major sources – the Diario of the first Spanish “factor” (head of the trading post) in Canton, Manuel Agote, indirectly indicates that RCF members were allowed to participate in opium trade in their private dealings. Having lost access to American silver, RCF employees participated in the flourishing opium trade with China and received financial support from investors based in Manila. Manila-based investment in opium negotiations unleashed speculation and even boosted the Philippine banking sector. The chapter moreover elaborates Spanish merchants’ business strategies in Xiamen, Canton, and Calcutta.

In search of the protagonists of Spanish participation in the opium trade, Permanyer-Ugartemendia has introduced various actors and trading houses from different geographical backgrounds and social positions. They include famous commercial names such as Manuel de Agote, José de Azcárraga or Francisco Xavier de Yrisarri, Manuel Larruleta (the factor in Calcutta) and other RCF members such as José de Mendieta and José María Uriarte. However, only those involved with British (e.g., Jardine, Matheson & Co.) and U.S. (e.g., Mackintosh & Co.) trading companies seemed to have benefitted from the opium trade. Yet their activities stimulated Manila’s overall economy. The city developed as a potential center of opium redistribution in the 1820s, as records on junks with opium to Quanzhou and Canton suggest. In light of age-old Fujianese mercantile shipping, Manila’s popularity as a potential hub for opium trade is less surprising than it may seem at first.

Chapter 5 (Crecimiento y caída) traces the crisis of the year 1825 when financial problems had driven Spanish merchants from Manila into debt with British and American companies active in the opium and tea trades in Canton. Quantitative data extracted from various types of correspondence reveal the complex financing practices and capital flows between Spanish (casas privadas españolas) and other Western traders in Canton for the sake of financing opium cargoes from India to China. Yet such negotiations also led to liquidations and bankruptcies on the Spanish side.

Chapter 6 (La herencia española de Jardine, Matheson & Co.) looks particularly at financing patterns of private trade not only between Calcutta, China, and the Philippines in the 1830s, and also at links back to London due to engaging with emerging Canton trade tycoons such as Jardine, Matheson & Co., as records of credit and insurance deals show. Traditionally Philippine-based merchants such as Gabriel de Yruretagoyena or Eugenio de Otadui invested in Chinese commodities such as tea or silk, but surviving fragmentary registers also show regular acquisitions of opium cargoes. Carefully researched commercial flows suggest blurring institutional boundaries between colonial trade, country trade, and Canton trade for the period prior to the first opium war.

In addition to the ‘thick description’ of business negotiations in Chapters 4 to 6, the epilogue (Chapter 7) displays enormous analytical strength. It discusses the political effects of Spanish opium trade initiatives and consumption in the Philippines, its connections to Manila’s overseas Chinese communities, and eventual changes. While at the end of the eighteenth century, Spaniards (e.g., Agote) showed no interest in participating in the opium trade, a royal prohibition of transporting and consuming opium from 1814 suggests that the drug regularly made its way to the Philippines. Further shifts included permission to cultivate and export opium from the Philippines in 1828, the transformation after 1843 into a monopoly of the colonial state under special legalization, and consumption restricted to Chinese residents in the 1840s. Nevertheless, opium always remained a small part of the colonial income.

The conclusion summarizes the key aspects of Philippine Spanish involvement with the opium trade. Permanyer-Ugartemendia re-emphasizes the significance of the Charter Act of 1813 and the heritage of the Manila Galleon trade in terms of an emerging capital market in the Philippines, as well as an increase in private initiatives to answer economic challenges proactively. Next to innovation, internationalization, and the creolization processes within the Philippine economy, the end of the Manila Galleon trade was momentous not only for the Spanish colony in Asia but also for Chinese foreign trade in general.

In an additional 200 pages, the author presents details of his craft and his sources; the latter are systematically documented at the end of the dissertation. Together with meticulous footnote references, ten insightful appendices reflect the overall transparent nature of the work. Extracted from secondary literature, appendices A through C provide information on the trade balance between China and the Western powers, including figures on silver imports and prices for opium. Appendix D presents the names of hong merchants as they appeared in contemporary Western trade records, those merchants’ commercial pseudonyms, and their actual Chinese names. Appendix E introduces the few RCF stationed in Canton, Calcutta, and Manila between 1787 and 1829. Appendix F, entitled “La Real Compañía de Filipinas y el opio,” provides long passages of transcriptions from one of the main sources of the doctoral thesis, the “diaries” (Diario) of Manuel Agote. It features information gathering on the opium trade, prices for opium, balance sheets, and communication with government officials. In a similar fashion, Appendix G introduces records of private trading companies, whereas Appendix H provides transcriptions of texts on opium in the Philippines. Appendix I includes an index of Chinese terms with toponyms and Chinese spelling, yet without Spanish translation or further explanation. The list concludes with an overview of Chinese imperial dynasties including a more detailed overview of emperors for the Ming and Qing periods (Appendix J).

Birgit Tremml-Werner
JSPS Postdoctoral Fellow,
Institute for Advanced Studies on Asia
The University of Tokyo
birgittremml@gmail.com

Primary Sources
Archivo General de Indias
Archivo Histórico Nacional
Jardine Matheson Archive
National Archives of the Philippines
Real Academia de la Historia

Dissertation Information
Instituti Universitari d’Historia Jaume Vicens i Vives, University Pompeu Fabra, Barcelona, 2013, 662 pp, Advisors: Dolors Folch Fornesa, Josep Maria Delgado Ribas.

Image: Painting of the factories, circa 1820, with flags of Denmark, Spain, the United States, Sweden, Britain, and the Netherlands. Wikimedia Commons.

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