The Opium Wars: When Britain Went to War Over a Trade Deficit

By the 1830s, Britain was importing over 30 million pounds of tea a year.

Tea was systemically important to the British Empire.

It was essentially a tax base.

The British government pulled roughly 10% of its total revenue from tea duties alone, which, in an era where modern income tax systems didn't yet exist, was really, really important.

And that tea came primarily from China.

Now, interesting segue.

I'm sure you're thinking the same.

Tea is a plant.

Why couldn't the British just, you know, grow tea for themselves in India? The answer to that is probably worth an entire video in and of itself.

an idea that I'm going to keep for the future.

But let's just say that the Chinese carefully guarded the secrets of tea cultivation and neither the British nor the Indians knew yet how to process tea into a sellable product.

So we've got this situation where Britain desperately needed China.

The problem was that China did not need Britain.

at all in 1793 emperor kuan long wrote directly to king george iii and here's the actual quote from the letter we possess all things i set no value on objects stranger and genius and i have no use for your country's manufacturers Yikes, and rough if you're King George.

You've got the most powerful monarch in Europe told flatly by maybe the largest economy on earth, we just don't need what you got.

I would argue that it's both insulting to Britain.

Certainly, I'm sure King George was insulted and by conjunction, the British were insulted, but it's also a little bit of a market signal.

And Britain had no answer to that market signal because there was almost nothing Britain made that the Chinese actually wanted.

Really rough situation.

So the result was that Britain paid for everything in silver, hard money, real metal leaving the country with nothing coming back the other way to replace it.

So between 1710 and 1759 alone, Britain shipped roughly 26 million pounds of silver to China.

and the deficit was a structural deficit.

It was the whole trade relationship working exactly as planned and designed, I should say designed, and slowly draining Britain dry.