Étiquette : emperor

 

Britain’s Opium Wars Against China, Key to Understand the Present

Dear guests and friends, Good Evening,

First of all, I would like to thank Carrefour France-Sichuan Association (ACFS) and its president Michel Panet for this kind invitation.

1. Introduction

I will start my presentation by talking about the present. We will then travel back in time to better understand what is happening to us today.

At the end of the Cold War and after the breakup of the USSR, it was hoped that peaceful cooperation would bring about lasting peace in the world. Unfortunately, today many conflicts have been rekindled.

From the China Sea to the Panama Canal, via Ukraine, Palestine, Greenland and Canada, the words « tariffs », « sanctions », « high-intensity wars », « annexation », « ethnic cleansing » and « genocide » have made a comeback, and unfortunately, they are not just words.

With regard to China. While we can rejoice that the prospect of a settlement through diplomatic channels is emerging to end the conflict in Ukraine, many analysts fear that the United States is mereley seeking to extinguish this conflict in order to have a free hand for a confrontation with China, designated in 2022 by the « kind » Democrat Antony Blinken as the country « which is, in the long term, the most serious threat to the international order. »

It is true that Donald Trump, after having exchanged on December 16 with Chinese President Xi Jinping on trade, the social network TikTok and fentanyl (a drug produced and distributed by the Mexican Cartels which has caused 100,000 deaths in the United States and whose precursors come partly from China), repeated almost word for word what he had said in 2017: « by working together, China and the United States can solve almost all of the world’s problems ». A few days later, as we know, he announced an increase in customs duties on foreign products, notably Mexican, Canadian, European and Chinese while showing himself willing to negotiate the time frame of their implementation.

This rivalry between the United States and China is reminiscent in many ways of the situation preceding the « opium wars » that I will talk to you about this evening.

Since the banking crisis of 2008, the current financial system has been in a state of virtual bankruptcy. Gigantic financial schemes, called derivatives and securitizations, mechanically generate financial bubbles. And like soap bubbles, financial bubbles inevitably end up exploding. When they burst, panic sets in and the system grinds down.

In 2008, the highest authorities of the UN in charge of the fight against narcotics admitted : the banking system, especially the interbank market which had come to a complete standstill, had been « lubricated » by billions of dirty money from crime, fraud, corruption, terrorism and drugs.

Worse still, after the crisis, nothing was done to prevent such a solution from repeating itself. No meeting of the European Council, the IMF or the G20 was devoted to the subject. Let us recall that it was only after the attacks of September 11 that the beginnings of the fight against the laundering of dirty money were outlined. Since then, the surveillance bodies set up were immediately diverted from their initial purpose. To this day, it is the strongest who use them to spy on and subjugate their enemies and vassals.

All this is reminiscent of the pitiful state of the British Empire at the end of the 18th century. A systemically bankrupt monster, the British Empire then chose drugs and war to perpetuate the privileges of its oligarchy in the name of « customs duties » and unregulated « free trade » as free as the fox in the henhouse.

The history of the Opium Wars shows that drug trafficking and war are not things that « happen to us, » but choices that corrupt elites impose on entire societies. Drugs are not something that « happens to us » through foreign aggression, but rather a choice that our leaders make through their acts and acts of omission.

As we documented in this book (shows book), the heirs of what was set up by the British following the Opium Wars, notably the Hong Kong and Shanghai Banking Corporation (HSBC) and the other « pearls of the Crown », that is to say the tax havens, allow a globalized narco-finance to prosper in full daylight and with complete impunity. By its size, this narco-finance has gone from « too big-to-fail » to « too big-to-jail ». Unless this taboo is lifted now, nothing serious can be done to eradicate the deadly narcotic business.

I will focus here on the (not so hidden) economic and financial stakes behind the opiim wars, which few historians dwell on. As long as we do not understand the driving force behind events, they will tend to repeat themselves. And as Marx once said, when history repeats itself, the first time it repeats as a tragedy, the second time as a farce.

Both Tragedy and farce, today, with the « white tsunami » of cocaine and ecstasy, and the corruption that accompanies it and which is eating away at France above all, history is repeating itself.

2. Deconstructing the « narrative »

The official « narrative », if it appears in school textbooks, presents the Opium Wars as a clash « between two empires » that they want to put on an equal footing, each with « its addiction » and each with its hypocritical and greedy elites:

  • Among the English, we are told, the addiction is tea; among the Chinese, opium. Let us recall all the same that we have never seen Chinese warships bombard English ports to force the British to consume Chinese tea…;
  • The British, we are told, advocated an « open door » policy, they sought to « open China » to « free trade, » Christianity and democracy;
  • The dangers of opium are « exaggerated, » the English have always told us. Laudanum (a few opium poppy seeds dissolved in ethanol) was freely available in their country, so why not elsewhere?
  • The British, we are told, only wanted to « satisfy » a demand and not to create it. If they had not sold their Bengali productions, others would have sold theirs, notably the Iranians and the Turks.

Fundamentally, this « narrative » is entirely false and at the very least without nuance, but it is the « narrative » of many conferences on the subject that most often end up, and this is logical, by advocating the choice rejected by the Chinese emperor and his advisors, that of the legalization of all drugs. Which goes to show that narratives are never neutral.

In any case, it is not a question of « two empires seeking to dominate the world »:

  • China, through its territorial and demographic expansion, but in a system favoring creativity and progress, must certainly face a strong and sometimes terrible « growth crisis » with populations demanding their share of development;
  • In contrast, for the British, war is written into the DNA of their system: a monetarism thriving on the rent drawn from land, possessions, raw materials and slaves to exploit them, all acquired at low prices and sold to the highest price, whether it be tea, opium and from Hong Kong, Chinese coolies sold to the United States.

3. Opium and its history

a) Plant and consumption

Before we continue, a few words about the product. What is opium?

Latex running out of opium poppies.

What we call opium is the latex (dried juice) produced by incision of the capsule before maturity of a plant, the « opium poppy » ( Papaver Somniferum ). Now what is special about opium is that it contains dozens of alkaloids that are used in pharmacy, more precisely morphine and codeine, two powerful analgesics.

Opium is consumed mainly in two ways:

  • In solid form (balls)
  • In liquid form (mixed with alcohol)
  • Smoked (with or without tobacco)

Like most drugs, opium can make you sleepy as well as overexcited. Like cocaine or captagon, it can make you insensitive to pain, a property much appreciated by warriors. In all cases, it gives you an illusory feeling of pleasure that you will find very difficult to do without. Opium dens, said one writer, are par excellence « the place where artificial paradises meet a real hell. »

b) Medical use

Recent archaeological studies have shown that it was in Switzerland that Neolithic farmers enabled the domestication of the opium poppy between 5 and 6 millennia ago.

Opium quickly entered the pharmacopoeia of Mesopotamia, Egypt and ancient Greece. Homer describes its use. The Arabs, the Venetians, the Portuguese, the Dutch and then the British were the first traders in opium.

In the United Kingdom, as we have already reported, laudanum, composed of a few poppy seeds in alcohol (wine or ethanol), was used for medicinal purposes.

Invented by the Swiss Paracelsus, this drink was sold over the counter at a low price in British pharmacies. Highly addictive and often fatal, because it contained morphine and codeine, laudanum was supposed to relieve the pain of coughs and migraines while offering a trance and ecstasy to poets lacking imagination. England consumed between 10 and 20 tons of opium per year for « medical use ».

Via the Silk Roads, opium was introduced to Central Asia and China during the Tang Dynasty (618-907). Its consumption, for medical use or as a kind of Viagra, remained marginal due to its foreign origin and its high price.

c) Tobacco

This situation would change radically in the 16th century with the arrival in the New World of Nicotiana tabacum, tobacco , consumed above all in America in the form of chews to quench hunger and thirst.

The « taking » and « chewing » of tobacco took over the whole of Europe and beyond, Asia, in a few decades. Smoking arrived in Italy in 1561, by Cardinal Prospero di Santa-Croce; in England in 1565; in Germany around 1570 by the Huguenots moving away from France; in Vienna in the same years. In 1580, it reached Turkey, which opened the door to Asia, where tobacco consumption became widespread in a few decades.

At the turn of the 16th century, the introduction of the pipe in Southeast Asia by the Portuguese and the Spanish marked a decisive turning point. First the Portuguese and then the Dutch, having clearly identified the extent of smoking in China, to boost their sales by making tobacco more addictive, dipped it in opium to obtain the famous madak.

The craze was immediate. Quickly, consumers, installed in nicely furnished living rooms when they were the upper classes, or in unsanitary slums for the poor populations in Jakarta, preferred to smoke madak and later chandoo (an opium refined to be smoked) with long pipes. It should be noted that smoked, opium « gains advantages » for the consumer: the risk of overdose is much lower than orally and the pleasure effect is no longer delayed but almost immediate.

Before the arrival of tobacco, China had already opened its doors to new crops from the New World, including corn, sweet potatoes and peanuts. While the consumption of these last three improves life expectancy, that of tobacco reduces it substantially. Smoking remains a major scourge in China. In 2020, with 300 million tobacco smokers, China still holds the world record for the number of smokers…

In the end, even before the British imposed legal opium production and consumption on China through war, the country already had an estimated 4 million to 13.5 million opium addicts. With at least 40 million opium users in China in 1949, Chinese opium addiction, on a state-wide scale, remains the largest wave of drug addiction in history.

The UN, in a report of 2008, stated that,

4. Trade with China

Before the Opium Wars, China had become a major economic and political power. Thanks to improved nutrition, the population of China increased from 100 million at the end of the 17th century to 430 million by 1850. Although there were fifteen major peasant revolts, some of which lasted for many years, the country was relatively self-sufficient.

Compare this with the number of inhabitants of the British Isles, estimated at less than 17 million in 1810, around 10 million in England and Wales, 5 million in Ireland and less than 2 million in Scotland, without taking into account the « great famine » which decimated at least 1 million people in Ireland in 1845, due to lack of potatoes (while Britain was growing tons of opium in Bengal !).

Direct foreign trade between China and European countries began in the 16th century, with the Portuguese as their first economic partners (1517), to whom the Chinese leased Macao (30 km²) in 1557. Then came the Spanish, who, by the Treaty of Saragossa (1529), legalized their grabbing of the Philippines which initially, by the Treaty of Tordesillas (1494), were under the rule of the the Genovese bankers dominated Portugese. The Spanish founded Manila there in 1571. And finally the Dutch, who settled in Indonesia, first on the island of Penghu (1603) north of Taiwan, then in 1619 in Batavia (Jakarta, Java, Indonesia), then in Taiwan (1624). The Russians came as neighbors by land.

It is important to understand how China traded with « foreigners » before the Opium Wars. To simplify roughly, we can speak of two systems:

  • the “Tributary System”;
  • the “Canton System”.

a) The « Tributary System »

Kowtow in front of a Ming Emperor.

The term « tribute system » is a Western invention. There was no equivalent term in the Chinese lexicon to describe what would today be considered the « tribute system, » and it was not intended as an institution or system.

The so-called Chinese tributary system or Cefeng system dates back to the Han Dynasty (202-220 BC). It reflected the Chinese worldview according to which China, of virtually uncontested grandeur and autonomy, was the world-civilization, that is, « all that was under heaven » ( tianxia ). The Chinese word for China (Zhongguo) actually means this: « Middle Country ». In this framework, although one can debate the possible interpretations, the Chinese emperor was considered the sovereign and therefore responsible for all humanity.

To organize economic exchanges with other peoples, called « barbarians » and « uncivilized, » the imperial court established a protocol. Non-Chinese could be accepted into the Emperor’s sphere if they were willing to go to court and perform the forbidden ritual of « kowtow » as a form of homage and recognition of his precedence. This prostration consisted of three kneelings and nine prostrations expressing a gesture of deep respect that consists of the person performing it kneeling and bowing so that his head touches the ground.

Kowtow of a Chinese citizen in front of a district judge.

It should be noted that the kowtow was not exclusively required of foreigners, but was also required when a person was, for example, brought into the presence of an official (representative of the imperial authority) for example to plead his case before a local court.

In everyday life in modern China, this gesture is no longer performed in front of a human being. Some Buddhists perform the kowtow in front of statues or a tomb to express the respect shown to the deceased. It is reported that some Buddhist pilgrims perform a kowtow every three steps during their long pilgrimages. It is also a ritual gesture in Chinese martial arts initiation ceremonies.

When visiting the Chinese court, sovereigns or emissaries would offer tribute (gifts) on this occasion. In fact, in exchange for this recognition, the tributaries received sumptuous gifts that often exceeded the value of what they received, thus demonstrating the benevolence and generosity of the Emperor. More important than the tribute, they obtained the implicit promise of protection (possibly military) and commercial rights.

Western observers like to exaggerate the importance of this ritual and see in it, somewhat wrongly, both a clear desire for Chinese domination and a form of active corruption on the part of the tributaries. In reality, the tributary system, which organized China’s diplomatic framework, mainly provided it with a means of regulating the flow of foreign goods across imperial borders. For the tributary states, the status ceremonially granted by the Chinese Court gave them privileged commercial access to Chinese ports. This status was above all protocol and did not necessarily imply strong political control.

Scholars differ on the nature of China’s relations with its neighbors in the traditional period, but generally agree that political actors within the tributary system were largely autonomous and in almost all cases virtually independent. Some historians even argue that China gave rise to a European-style community of sovereign states and established diplomatic relations with other countries around the world in accordance with international law.

The list of countries that paid tribute to China is very long. It includes neighboring countries but also the Portuguese and the Dutch who considered that the commercial advantages obtained in exchange were so advantageous that they willingly complied with it, seeing it only as a formality and a ritual of respect and politeness.

b) The « Canton system »

The second way of trading with China, the so-called Canton (now Guangdong) system, emerged in 1757 under the Qing dynasty (1644–1912). From the beginning of his reign, the Kangxi Emperor (r. 1661–1722) faced a number of challenges, not the least of which was integrating his relatively new minority dynasty from Manchuria into the Chinese Han majority. Support for the previous Ming dynasty rulers remained strong, particularly in the south of the country, including Canton.

Kangxi twice banned all maritime trade for internal security reasons , to prevent any attempted seaborne coups. During the Qing dynasty, no fewer than 15 rebellions took place, including one led by Koxinga, a Ming loyalist, and separately the Three Feudatories Rebellion, which led to the capture of Taiwan in 1683.

After the rebellions were suppressed, Kangxi issued an edict in 1684:

For 160 years, Canton would be the only Chinese port open to trade with the West. Canton, a fortified city 100 km inland on the Pearl River, already by its geography, offered a certain security.

A large city in the south, with good rainfall in the center of the tea-producing region and with a densely populated hinterland rich in productive capacities, Canton is one of the economic lungs of China.

China sets the rules:

  • foreign merchants are not allowed to enter Canton;
  • warships are prohibited there;
  • All orders for export and import must be placed through one of the 13 members (Hong) of the Chinese merchant guild (the co-Hong);
  • The Hongs rented them a small piece of land outside the city walls on the banks of the Pearl River, known as the « 13 Factories »,
  • Western merchants may only be present in the trading posts during the trading season, which extends from June to December. Women and weapons are prohibited there;
  • Westerners can store some goods there, but they are primarily trading posts and offices;
  • The bulk of their goods must remain 13 km to the south, on the island of Whampoa;
Map of the City of Canton, with citywalls and location of « 13 Factories ».
The « 13 Factories » in Canton.
Island of Whampoa.

Since the Portuguese operated from Macau and the Spanish from the New World through Chinese residents in the Philippines, the system would primarily serve a handful of other Western and Christian powers: French, Dutch, Danish, Swedish, Spanish, Americans and British.

5. Economic and Financial Stakes

Let us now examine the economic and financial issues, essential to understanding how the logics which, as long as we remain slaves to them, end in war:

a) Tea

The first economic and financial issue at stake was not the Chinese addiction to opium but that of the British to tea. According to legend, tea was discovered in China one day in the year 2737 BC, by Shen Nong. This emperor with the body of a man and the head of an ox wanted to improve the lot of humans and it was to guarantee their health that he ordered his subjects to boil water before drinking it. One day, while he was resting in the shade of a tea plant, he boiled a little water to quench his thirst. Three leaves fell into his cup. He tasted this infusion and found it exquisite. Tea was born.

Tea imports in Britain.

Tea first appeared in China as a medicinal drink and was later consumed daily for pleasure. By the 17th century, tea began to travel to Europe, following the Silk Road. In 1606, the first crates of tea arrived in Amsterdam aboard a ship of the Dutch East India Company (VOC), making it the first shipment of tea in history to be delivered to a Western port. Accounts vary. What is said is that England adopted tea and its rituals after King Charles II received two pounds of black, fragrant leaves from China in 1664.

Old East India House in London.

By the end of the 17th century, tea was the national drink of the Kingdom.

Between 1720 and 1750, tea imports to Great Britain through the British East India Company (EIC) more than quadrupled. Real « tea fleets » developed. In 1766, exports from Canton reached 6,000,000 pounds (2,700 tons). At their peak, in the 1830s, England imported 360,000 tons of tea from China per year.

A minor but not insignificant effect was that the British Treasury also became addicted, not to tea, but to tea revenues, since it levied a 100% customs duty on its import .

As Waley-Cohen writes:

b) Trade Deficit

Even as the EIC’s profits were no longer sufficient to offset the cost of governing India, tea-loving British helped push trade figures with Asia into the red.

While British merchants and the British treasury were enriched by buying tea cheaply, taxing it, and selling it at a higher price, by the 1780s Britain’s trade deficit with China was exploding.

c) Financial Deficit

Silver imports of China. EIC = East India Company; Country traders are undboubtless the Chinese traders importing silver from New Spain (Mexico).

Symptomatic of this imbalance is the fact that the Chinese, who buy almost no goods in return (a little tin and iron), demand silver (metal) as the only accepted means of payment.

It all began in 1571. Until that date, China collected taxes from its inhabitants in the form of corvées or goods. At that time, it decided to levy taxes in silver. On a daily basis, for small daily payments, the Chinese used copper coins with which, when the time came, they could obtain silver ingots (sycees) to pay taxes or make large transactions.

Sycee (lingot of silver metal)

The sycees had no denomination and were not struck by a central Mint. Their value was determined by their weight in « tael » (unit of weight. One canton tael = 37.5 grams, one tael = one thousand copper coins).

Another accepted means of payment was the « piece of eight » or « Spanish dollar », the main international currency at the time. (See box)

« Spanish dollar » also called « Piece of Eight ». The two columns will be intetrated in the american dollar sign ($).
The Manilla-Acapulco trade (China aquiring silver from New Spain (Mexico, Bolivia and Peru) in exchange for porcelaine, silk and tea sold by Chinese traders based in Manilla, the Philippines.
1888 Republica Méxicana silver 8 Reales trade coin, with chinese marks on it to be allowed in China.

Thus, to pay for British imports from China (tea, porcelain, silks), between 1710 and 1759, 26 million pounds in silver went to China, which bought only 9 million worth of goods in return from England.

This situation would become even more critical for the British Empire later. Firstly because of its own colonial policy, because of the speculations leading to the dismantling of the EIC and because of the emancipation movements contesting its policy of plunder and slavery.

In 1773, the American « insurgents » during the Boston Tea Party demanded the right to trade freely with countries outside the British Empire. The French and Spanish Bourbons, seeking revenge for the humiliation suffered in the Seven Years’ War (1756-1763), supported, first covertly and then openly, the American « insurgents ».

Other countries challenged British hegemony. In Europe, in 1780, the member countries of the « League of Armed Neutrality » (Sweden, Denmark, Russia, the Netherlands, Prussia, Portugal, etc.) demanded their right to trade with America and refused British dictates and sanctions.

Then followed, at the beginning of the 19th century, after civil wars for their sovereignty, a series of « independences » depriving both the English and the Chinese of the precious silver metal that they needed so much, notably Colombia (1810), Venezuela (1811), Chile (1811), Mexico (1811), Paraguay (1811), Peru (1821), Uruguay (1825) and Bolivia (1825).

Added to this, after strong speculative surges, were repeated panics and bank failures: that of 1819 in the United States and those of 1825 (77 banks were declared bankrupt) and 1847 in London.

These shocks contribute to the feeling of panic in the face of a system that is shaking and will contribute to fueling a dynamic of war appearing as the last option to « save » the system.

d) Cotton

Finally, another additional factor upsetting the balance, the mechanization of production lines. The invention of the steam engine, the previous century, led to a mechanized production of cotton by factories in the north of England.

Steam powered ginning of Coton in Britain.

Quickly, the world market was flooded with cheap cotton textiles produced in very large quantities. Textile producers feasted in England and the surplus was absorbed by the Indian market. However, anyone looking to buy goods in India had to obtain « Council Bills », a paper currency issued by the British crown that could only be purchased in London by paying in gold or silver… When the Indians converted these Council Bills into currency, they were given the equivalent in rupees, rupees collected by the British tax authorities on site. As a result, in order to be able to buy the immense quantities now at their disposal, the English merchants established in India also needed an ever-increasing quantity of metal silver.

Boom of the British Coton exports to India.

On the side of their British masters, although the Indian economist Utna Patnaik arrives at the sum of 45,000 billion dollars to quantify all the wealth extorted by the British from India, at the time, the EIC’s account books indicated that the costs of maintaining the Empire exceeded the EIC’s income: for example, from 1780 to 1790, the combined profits from the EIC’s trade with India and China reduced by barely 2 million the debt of 28 million pounds, left over from their conquest of India.

6. Open China!

a) Lord McCartney’s embassy

Lord George Macartney.

Although the First Opium War did not begin until 1839, the first « virtual shot » fired in that conflict occurred fifty years earlier, when the British envoy completely failed in his attempt to « open China. »

This envoy, Lord George Macartney (1737-1806) was a seasoned diplomat known for his efficiency and dynamism. His mission was simple. It was to obtain a privilege that no other country in the world had: diplomatic representation in Beijing and the right for British ships to dock at ports other than Canton.

Tea, porcelain and fabrics in themselves, trade with China was booming to the point that Canton was congested and unable to handle the volumes sought. In bad shape, the British were quick to demand an « open door » policy.

After a year-long journey, at the expense of the British East India Company, the British envoy, accompanied by a delegation of one hundred people, arrived on September 14, 1793. The emperor did not receive them in Beijing, which would have meant a meeting between equals, but in a yurt (tent) erected in front of his mountain residence in Rehe (present-day Chengde), 227 km to the north, where the sovereign retired when it was too hot in the capital and where he would receive the Englishman among emissaries from several other countries.

Emperor Qianlong.

The emperor, a scholar, a calligrapher, a patron of the arts and sciences with a library of 36,000 books, is at the height of his glory. His reign had begun in 1736, 57 years earlier. Under his rule, China became the most populous country in the world and its territory doubled.

Then the inevitable question of ritual prostration before the Chinese emperor arose. Given the commercial stakes, Macartney, in his finest ceremonial costume, said he was willing to engage in kowtow. Only, in exchange, as the representative of the largest Empire on the planet that has just launched the industrial revolution, and convinced that establishing a relationship on an equal footing was already a debasement, he demanded that the members of the Chinese imperial court do the same… before the giant portrait of King George III of England (1738-1820) that he has brought for the occasion!

The mandarins decline, especially since it is unthinkable to do this in front of other foreign delegations! The Chinese then demonstrate their patience and diplomatic genius. Finally, the emperor agrees to receive Macartney if he pays the same homage before the Chinese imperial throne as he is accustomed to pay before that of his own sovereign.

British cartoon mocking Lord Macartney kneeling in front of the Chinese Emperor.

Macartney kneels before the emperor without kissing his hand, which is normal in London but strange in China. This protocol difficulty finally overcome, the interview takes place. He offers the letter from King George III to the emperor. In return, the latter showers the ambassador with precious gifts, but rejects his requests, has him escorted back to his ships and sends him home. He orders his officials in Canton to keep a close eye on foreign merchants in general and the British in particular.

The Emperor examines the 600 gifts Macartney left at the Yuan Ming Yuan (Summer Palace). These gifts – including telescopes and other astronomical instruments, model British warships, textiles and weapons – are of excellent workmanship and demonstrate the scientific knowledge and technical skill of the British. But in reality, while the Chinese would have liked to have access to the steam engine, locomotives and steel rails, the gifts are only intended to display British supremacy in weaponry…

Most accounts of the embassy see Macartney’s refusal to bow to the Emperor as the immediate cause of its failure, but the misunderstanding goes deeper. The Chinese defend a philosophy, the British their Empire with its privileges and possessions.

As is often the case before destructive wars, there is a total lack of empathy, an inability to understand the intention and the frame of reference of the other. People spend their time commenting on the colour of their own glasses. They think they know without taking the time to know. Macartney thought that diplomatic relations could be established with China in the same way as they were established in Europe and on the same basis, while Qianlong expected Macartney to honour him by complying with the Qing ceremonial for the reception of foreign dignitaries. Both were wrong.

The exchange of gifts was another source of confusion. Macartney, for example, was unaware that the golden sceptre Qianlong presented him with was a symbol of peace and prosperity, and rejected it as inappropriate and of little value.

Qianlong, for his part, who was passionate about new technologies, considered in his letter to King George III that the sumptuous gifts from the British were only trinkets and could contribute nothing to the development of Chinese manufacturing. (See box)

Portrait of King George III.

Compounding his performance, Macartney’s constant reversals, which demonstrated his willingness to adapt and compromise, convinced the Chinese that the British were hiding their true intentions, which only served to irritate them. Under these circumstances, the Qing felt no pressure to make any concessions.

In any case, the British demands seemed exuberant to the Chinese. What was the point of an embassy in Beijing, more than two thousand kilometers from Canton, when trade was being negotiated there? After all, the Hongs already supplied all the products the English demanded!

The Emperor Qianlong , who received Macartney, left power in 1796 to Emperor Jiaqing (1760-1820), who was succeeded by his son, the Daoguang (1782-1850).

His suspicions proved fully justified. In the years following the Macartney embassy, the British would ignore Chinese laws and warnings not to deploy military forces in Chinese waters.

  • In 1802, claiming that they wanted to protect Macau from a French invasion, they attempted to seize the enclave leased by China to the Portuguese;
  • Then, during the War of 1812 between the British and Americans, the former attacked American ships deep in the inner harbor of Canton (the Americans had already plundered British ships in Chinese waters);
  • And in 1814, after that country had become a tributary state of China, Nepal was invaded and forcibly incorporated into the British Empire. All this led the Chinese authorities to become very suspicious of the true British intentions.

b) The Opium « Solution »

Producing opium in Bengal and selling it illegally or legally in China then appears to be the obvious solution, because it allows us to « resolve » almost all of the problems we have just mentioned:

In 1825, the EIC’s mere income from opium was sufficient to pay for its imports of tea from China.
  • From 1828, thanks to the opium trade, the trade balance was reversed: more money left China than came in;
  • The flow of silver metal reversed towards the British Empire: between 1808 and 1856, 384 million silver dollars left China for the British Empire thanks to the boom in opium imports, while between 1752 and 1800, 105 million silver dollars went from the British Empire to China thanks to the sale of tea, porcelain and silks. From 1800 to 1818, the annual average of the traffic stabilized around 4,000 chests (each chest containing about 65 kg of opium); from 1831, this figure approached 20,000;
  • The British got enough to buy Chinese tea. In 1839, the revenues from opium alone paid for all the tea purchases;
  • The British Treasury collected customs duties on tea imports, allowing it to modernize the Empire’s Navy, the same Navy that was used to defeat China;
  • British merchants established in India got the necessary silver income to pay the « Council bills » in London, allowing them in return to buy surplus cotton in England.

Aren’t you happy?

7. Opium routes

Britain, India and China: the opium road.

Long before the British, it was the Portuguese and the Dutch who introduced opium into China.

a) Portuguese

Mansion of an opium trader in Macao.

After being banned, as in various other European countries, tobacco was reintroduced into China around 1644 under the Qing dynasty, which, without fully understanding the consequences, made itself vulnerable to the opium scourge by trivializing smoking. In West Bengal, the Portuguese settled in Satgaon from 1536 and then in 1578 in Hooghly, on the Ganges. From 1589, the Portuguese began to bring increasing quantities of opium into China via Macao, a Chinese territory leased to the Portuguese in 1557.

The opium trade played an important role in the economy of Macao for a long time, also representing a significant part of the peninsula’s income. It should be noted that Macao, whose gaming industry is now 10 times larger than that of Las Vegas, just like the Emirates, was removed a few years ago from the blacklist of tax havens to join the « grey list » of « cooperative » tax havens.

b) Dutch

The Dutch come next. At war at home against Spain and in search of financial profits, they dominate the « spice route » and regularly wage war against their Portuguese, Spanish or British competitors.

They settled in Penghu (1603), a small island next to Taiwan, then in 1619 in Batavia (now Jakarta in Indonesia) and finally in Taiwan (1624). The Dutch also opened a base for their Dutch East India Company (VOC) in 1659 in Bengal. The Batavians did not do things by halves. In 1740, after the sudden collapse of the price of sugar, the Chinese laborers working in Batavia (Java) whose wages were being crushed, revolted against their employer, the OIC. To avenge the deaths of a good dozen Dutch who perished during the revolts, no fewer than 10,000 Chinese were massacred…

Chinese merchants based in Indonesia and Dutch, from Jakarta (Indonesia), and Portuguese from Bengal (India), will export opium to Guangdong and Fujian (China).

c) Britain and the British East India Company

London: Main office of the British East India Company (EIC).


In India, the English drove out their European competitors (France and Portugal). In 1632, the troops of Emperor Shah Jahan laid siege to Hooghly in Bengal (West India) and expelled the Portuguese. 19 years later, in 1651, the English settled there and in 1690, they made Calcutta, 40 km south of Hooghly, their commercial base in Bengal where they took over opium production.

In 1683, the British East India Company (EIC), whose importance for tea we saw, gave instructions for the first time that opium should be part of its investments.

Meanwhile, in China, the first decrees appeared: as early as 1709, the court declared that opium consumption, prostitution and the corruption that accompanied it, were harmful to people’s physical and mental health. In 1729, opium dens were banned in China. These imperial decrees, which sounded more like warnings and were poorly enforced, gave rise to the establishment of vast smuggling networks thanks to the collaboration of corrupt officials who turned a blind eye to the contents of European ships arriving at the port.

In 1757, following the Battle of Plassey , the British imposed themselves and seized in 1764 what would become the opium poppy producing regions: Bengal (Calcutta) and the bordering states which are, to the north of Calcutta, Bihar and to the east, Odisha.

The modus operandi of this trade will undergo a profound change. Initially, everything is done under the « legal » monopoly of the EIC, then passes into the underworld of the gentleman traffickers.

Modeled after the powerful maritime empires of Antiquity (Athens, Phocaea, Carthage, etc.), Italy (Amalfi, Pisa, Genoa, Venice, etc.) and Portugal, the EIC was the largest and richest private (joint-stock) company in history, founded in 1600 by a royal charter of Queen Elizabeth I. In 1602 the EIC arrived in Java in Indonesia, due to its climate, the ideal place for the production of many spices (pepper, nutmeg, cinnamon, cloves, lemongrass, fennel, anise, ginger, etc.), in 1608 it set foot in Surat, India and in 1613 in Japan. In 1699 it traded with Canton in China.

A state within a state, the EIC levied its own taxes and administered justice through its own courts. And to protect its trade, it had the right to wage war. To this end, it paid for its own armies and leased long-term regiments from the British regular army. It was an entity with sovereign powers. It was accountable to no one except the shareholders it enriched through its worldwide trade in spices, tea, textiles and opium.

Between 1730 and 1770, the EIC imported slaves on a large scale from Mozambique and especially Madagascar into India and Indonesia. In Indonesia, the Dutch militarily drove the British off the « spice route ». In 1773, the British supplanted the Portuguese in India and the EIC imposed its monopoly on the opium trade with China, in particular to finance its own conquest of the Indian subcontinent. In short, the EIC fed « on the beast ».

On the ground, the populations hardly benefited from it. The colonial government of Bengal weakened food crops by directing local production to benefit the trade balance of the British Empire. The export of jute, indigo, cotton, opium and… grains, ensured by European trading houses, made the commercial wealth of the colonial administration.

In 1880, 14% of the revenues of India under British mandate came from opium while its population declined. The beginnings of the territorial establishment of the EIC coincided with the great Bengal famine of 1770 which caused, according to sources, between 10 and 60 million deaths.

Consistent with its vision of financial income and human livestock, the EIC employed in 1805 at Haileybury College, to train its executives, the Reverend Thomas Malthus for whom demographic growth always exceeds the means to support it.

At the producer-consumer level, the EIC knew full well that opium was banned in China. In order not to compromise its tea imports, the EIC therefore invented a stratagem that did the trick.


A busy stacking room in the opium factory at Patna, India. Lithograph after W. S. Sherwill, c. 1850.

In Bengal, the company organized the large-scale cultivation of the poppy and all the industrial phases of its processing, from the exhausting harvesting of latex by incising the poppy capsules, to the passing of this latex over drying trays, to the pressing into balls which were covered with a layer of crushed and dried poppy stems and leaves, and finally to its packaging in mango wood boxes. Some 2,500 employees working in 100 offices of a powerful colonial institution called the Opium Agency supervised the poppy growers, enforcing contracts and quality with an iron fist. The Indian workers received commissions on each unit produced.

The EIC’s « opium fleet » shipping raw opium from Northern India to Calcutta for auction.

Initially, the crates were sent to Calcutta where they were auctioned. From there, the company could wash its hands of what happened to them, leaving private merchants to venture off the Chinese coast. It is worth noting that the EIC granted licenses to private ships trading with China, licenses which contained a provision that penalized them if they carried opium… other than that supplied by the EIC.

Opium use for non-medical purposes was forbidden in China – the first laws banning opium had been enacted in 1729 – and the EIC did not want to be seen as illegally importing opium, which would have prompted a reaction from the emperor.

Instead, it would use Indian merchants licensed by the Company to trade with China. These companies sold opium for money, particularly around Lintin Island at the mouth of the Pearl River, where Chinese smugglers collected the goods and distributed them throughout China.

Exchange between British and Chinese opium smugglers.

Opium was also shipped to other parts of the Chinese coast, but outside its territorial waters, where it was smuggled into the country on local boats. The smugglers’ payments were made at the Company’s establishments in Canton, and by 1825 the bulk of tea purchases were covered by drug trafficking. By 1830, there were over 100 Chinese smugglers’ boats trading in opium.

In 1858, Karl Marx mocked the false Christian values that the British government evoked in its fight against the Chinese « semi-barbarians » and pointed out the enormous profits:

By the end of the 19th century, the poppy was harvested by some 1.3 million peasant households in what are now Uttar Pradesh and Bihar states. The crop occupied between a quarter and a half of a peasant’s farm. A few thousand workers – in two opium factories on the Ganges – dried and mixed the milky liquid from the seed, made it into cakes, and packed the opium balls in wooden chests.

Opium weighing in India under British rule.

However, judged too corporate, constantly bailed out by the British State, corrupt, managed from London and judged inefficient, it encountered much opposition. In 1832, when its serious responsibility in the haemorrhage of the Treasury’s silver stocks was noted, its monopoly on trade with China was abolished

As Adam Smith wished, who opposed all forms of monopoly, whether private or public, the tea and opium trade was then handed over to more dynamic gentleman traffickers. The Crown, while setting itself up as the guarantor of the « international rules-based order », cultivated the art of black, grey and shady areas (like today’s tax havens) allowing it to triumph.

d) Gentlemen traffickers

Dr William Jardine, the scottish opium billionnaire that got the war started against China.

The leading figure of this species was the Scottish surgeon, Dr. William Jardine , a staunch supporter of the legalization of the opium trade, from which he made his fortune. He was employed by the EIC from 1802 to 1817 before settling in Bombay.

His early success in Canton as a commercial agent for opium merchants in India earned him admission in 1825 as a partner in Magniac & Co., and by 1826 he was in control of the company’s operations in Canton, where he had been operating since 1820.

James Matheson , another Scot, joined him shortly afterwards, and Magniac & Co. was reconstituted as Jardine, Matheson & Co. , the great firm that made its fortune from the sale of opium in China and which still exists today under the name « Jardines » with assets of around $100 billion.

Based in Hong Kong and domiciled in Bermuda (a tax haven suspected of dope money laundering), it officially ceased this trade in 1870 to devote itself to other commercial activities, including shipping, railways, textiles and real estate development.

William Keswick.

To be complete, we must add the Keswick dynasty, whose founder, the Scotsman William Keswick (1834-1912) who would be a major grey emissary at the heart of this nebula.

His grandmother, Jean Jardine Johnstone , was the elder sister of Dr William Jardine, founder of Jardine Matheson & Company.

His father, Thomas Keswick , had married Margaret Johnstone, niece of Jardine and daughter of Jean, and had entered the Jardine business.

Logo of the current Jardine Matheson Group, not any longer in opium.

What drives Jardine and Mathison is an unabashed Sinophobia.

The Chinese, Matheson said, were,

James Matheson.

After China destroyed opium chests seized from British traders in 1839 and ordered Jardine’s arrest for violating all existing laws, he fled to London in 1839. Finally, from 1841 until his death in 1843, he sat in Parliament for Ashburton, representing the Whig party.

It was he who, through lobbying and media offensives in the press, convinced both Parliament and the then Foreign Minister, Lord Palmerston, to whom he sent a letter detailing the strategy that would be adopted to launch the first opium war. The English merchants whose merchandise had been confiscated in Canton would not be compensated immediately. This would be discussed in more detail after the victory. As for the costs of the war, even for a small war England could not afford it. The solution was quickly found: the bill would be presented to the losers, the Chinese.

Speaking of Jardine & Matheson, Waley-Cohen points out:

8. The « religious » factor

What may be surprising today is that Protestant and Catholic missionaries were the natural allies of the traffickers: once they reached the Chinese coast, they landed among the opium merchants on Lintin Island, acted as their interpreters in exchange for places on ships sailing north, distributed their piety tracts as the drugs were unloaded; and, in the Chinese Repository , the main English-language Protestant publication in Canton, they shared a forum for spreading their views on the urgent need to open China by any means necessary.

The Protestant London Missionary Society sent its first representative to southern China, Robert Morrison, in 1807. Mission observers expressed their frustration during the 1830s in the tones of pure imperialist paternalism:

By the 1830s, merchants and missionaries were both advocates of violence.

« When an adversary supports his arguments by the use of physical force, [the Chinese] can be humble, kind, and even good, » noted Karl Gützlaff, a rugged Pomeranian missionary who, during the Opium War, would lead the British military occupation of eastern Chinese territories, managing entire armies of Chinese spies and collaborators.

For its part, London would sanction any English official opposed to the conflict and install military personnel who had triumphed against Napoleon, such as the evil William Napier, Chief Superintendent of British Trade in China who enthusiastically noted in his journal:

9. Consequences of opium addiction

a) Medical and Social consequences

Chinese opium smokers.

Opium quickly caused dramatic health havoc, first among the elite and then among the Chinese people as a whole. Initially, the consumers were scholars, officials and intellectuals. They became totally dependent and ruined themselves to obtain it. For the Jiaqing emperor, his people  » waste their time and money, they exchange their silver currency and their goods for this vulgar filth from abroad ».

Opium consumption reduced the life expectancy of Chinese opium addicts, mainly men between the ages of twenty and fifty-five. Habitual smokers (8 pipes per day) died within 5 to 6 years, modest smokers (1 pipe per day) after 20 years. Most opium addicts succumbed before the age of 50.

Opium smokers in Indonesia.

In 1836, even before the British imposed the legalization of opium by war, China already had between 4 and 13.5 million consumers, according to estimates.

Joanna Waley-Cohen, in her book The Peking Sextants, notes that in those days (much like today), everyone could easily find a good reason to indulge in the now ubiquitous drug:

b) Economic, Monetary, FInancial and Political consequences

  • Economically, productivity is falling because of the havoc this drug is wreaking on the Chinese population;
  • On the monetary and financial level, the purchase of opium by Chinese consumers then substantially reduced the quantity of silver, as we have seen, essential to the monetary system. Between 1793 and 1836, the silver reserves of the imperial treasury went from 70 million taels to only 10 million taels. As silver became scarcer, its price soared. As a result, for the Chinese citizen at the bottom of the scale, who, in order to pay his taxes, had to obtain silver with his copper currency, the drop in his purchasing power was brutal. A petition addressed to the Emperor in 1838 expressed alarm at the fact that the « copper price » of silver had suddenly gone from 1000 to 1600 coins! As a result, there was growing discontent against the emperor and the multiplication of peasant revolts,
  • On the political level, members of the Qing government were concerned about the corrupting effect that the establishment and flourishing of a drug culture would have. If the court resolutely rejects any idea of compromise and resists a section of the Chinese elites in favour of the legalisation of opium, it is because it sees all of these factors clearly. But above all, she became aware of the danger that all the oppositions, internal and external, could one day, when the planets aligned, join forces: corrupt elites, nostalgic for the previous dynasty, peasants suffering the collapse of their purchasing power, foreign powers seeking to « open » China to their colonial pillage and Protestant and Catholic evangelists in tune with the opium traffickers, all wanting to conquer the wealth, bodies, minds and souls of the Chinese, including by overthrowing the dynasty.

10. The unavoidable?

a) First Opium War (1839-1842)

Lin Zexu.

If for the English, the situation was restored from 1828, for the Chinese, with more than 10 million people addicted to opium, the situation was untenable. The Emperor Daoguang (1782-1850) then sent the imperial commissioner Lin Zexu (Tse-Hou) (1785-1850) to Canton. A former soldier, a scholar, he was an exceptional man.

In 1839, he arrived in Canton to supervise the banning of the opium trade and to suppress its use. He attacked the opium trade on several levels. First, he tried to reason with the British. To do this, he published in Canton an open letter sent to Queen Victoria (1819-1901), Queen of England since 1837, asking her to stop the opium trade. (see box)

Queen Victoria in 1843.

Without a response from the Queen, China, faced with an existential choice, then decides to apply the law, essential to preserve its integrity and sovereignty.

Overmore, among the scholars advising the emperor, opinions were divided:

  • On one side, those who were keen to target opium consumers rather than opium producers. For them, the production and sale of opium should be legalized, then taxed by the government, an argument that still makes some people dream today. Taxing the drug would make it so expensive that people would have to smoke less of it or not smoke it at all (as if the black market would magically disappear). The money collected from taxes on the opium trade could help the Chinese government reduce the loss of revenue and the flight of money (what a bargain!). The purchase of opium was to be done exclusively with Chinese goods, thus preventing money from fleeing the country (a bit of protectionism to defend the industry!);
  • On the other side, stood those who argued that if the opium trade and the vices that came with it (idleness, prostitution, corruption, addiction, debt, etc.) could not be eradicated, the Chinese empire would have no more peasants to work the land, no more townspeople to pay taxes, no more students to study, and no more soldiers to fight. Rather than targeting opium users, the traffickers had to be arrested and punished.

The second camp is led by Lin Zexu but his strategy was twofold:

  • the rehabilitation of opium addicts. In 1839, there were between 4 and 13.5 million of them. They had 18 months to wean themselves off, they risked the death penalty if they did not give up;
  • the end of impunity for banking and commercial interests, whether Chinese or foreign, involved in the opium trade.

When the British merchants in Canton refused to hand over their drug shipments, Lin Zexu laid siege to the « 13 factories ». He deprived them of their staff, forcing the gentlemen-traders to prepare their own meals and take care of the latrines. On February 26, 1839, to make them understand what awaited them, Lin ordered the hanging of a Chinese trafficker in front of the Cantonese representations of the British merchants who claimed not to be liable to local law.

Despite the hostility of a corrupt part of the Chinese elite, he arrested 1,600 Chinese drug traffickers and confiscated 42,000 pipes and 14,000 cases of opium. But at least 20,000 remained on board the ships off the Chinese coast…

He then issued an order requiring foreign merchants in writing not to transport opium and to allow their ships to be inspected. Captain Charles Elliot, the British Chief Superintendent of Trade in China, called for disobedience and ordered British ships not to sign the agreement because if opium was found, the cargo would be confiscated and the perpetrators executed. The English claimed extraterritoriality and even when a Chinese peasant was killed by the British, they refused to hand the culprit over to the Chinese authorities.

After multiple injunctions, threats and summons, Elliot finally released 20,290 chests of opium to the Chinese authorities. To the British merchants, he assured them that the British Crown would compensate them for the value of the merchandise, estimated at two million pounds. This was the trap he set for Lin Zexu. Elliot and Lord Palmerston, who had made the decision a long time ago to go to war against China, thus creating the pretext to launch the war: British interests had been « plundered » and their flag « mocked ».

The destruction of British opium ordered by Lin Zexu.

Lin, proud of his victory, on June 7, 1839, had the crates opened, reduced the opium to a paste, ground it with quicklime in specially constructed vats, and threw it into the sea. They asked forgiveness from the gods of the sea for polluting it in this way. The foreigners were ordered to abandon the factories and retreat to Macao.

Hong Kong, on the other side of the estuary, was initially only a fishing village. The English who rushed there continued to be harassed by the Chinese who cut off their supplies.

Then, the first British aid arrived. At the naval battle of Chuenbi in November 1839, near Canton Bay, two British ships engage 14 imperial junks and sink four before withdrawing without loss, demonstrating their nation’s technological superiority.

In London, under pressure from the « Big Opium », the merchant lobby led by William Jardine, the British Parliament decided in October to send a military expedition to China. There was not a penny in the coffers, but that was not a problem, the losers would pay the costs.

Lord Palmerston.

Lord Palmerston, British Foreign Secretary, immediately sent instructions to Elliot demanding an end to hostilities. Among the conditions:

  • a preferential trade treaty for the British in China;
  • the opening of four ports (Canton, Xiamen, Shanghai and Ningbo, where illegal opium was already entering China);
  • the ability for British citizens to be tried in accordance with the laws of their country.

Over the next few months, the British withdrew their military and diplomats from Canton, giving the impression to the Qing Empire that they did not want open conflict. It was the calm before the storm.

Palmerston sent a letter to the government of India to prepare the squadron of an expeditionary force: 16 ships of the line, 4 gunboats, 28 transport ships, 540 guns and 4000 men. His first objective was not Canton, but the strategic island of Zhoushan, near the mouth of the Yangtze, about 1500 km from Canton and 1400 km from Beijing.

The final goal sought was very clear: to obtain compensation for the confiscated opium, for the settlement of certain debts of the Co-Hong merchants and for the cost of the expedition, to open the ports of the coast, Canton, Amoy, Fuzhou, Ningbo, Shanghai to British trade freed from the system of the Co-Hong merchants. Finally, to set up the blockade of Canton, to control the mouths of the Yangtze and the Yellow River in order to paralyze Chinese foreign trade and to seize Pei-Ho (forts of Taku), at the gates of the capital.

The British iron frigate HMS Nemesis, on the right, destroying Chinese jonks.

The fortress fell in a matter of days to the power of the artillery of British ships, notably the HMS Nemesis, considered the English « secret weapon » in the Opium Wars and the first steam frigate in history with an iron hull and watertight bulkheads.

This first flat-bottomed ship equipped with paddle wheels, could easily penetrate the mouths of Chinese rivers. Supposedly built in only three months at the request of the EIC’s « secret committee », Chinese wooden junks could not compete with such a technical feat.

The Europeans, with their steamships, rifles and easy-to-maneuver cannons, won thanks to their technological superiority. The Chinese, on their side, had only a few rudimentary cannons, bows, arrows and spears. But as some battles during the Second Opium War demonstrate, they studied their opponent’s military technology and tried to assimilate it as quickly as possible, but were unable to catch up in time…

After this show of force, the British moved to the Pearl River Delta to subdue Canton. But their conditions for ending hostilities, which included the surrender of Hong Kong Island in exchange for Zhoushan Island, were unacceptable. They captured Canton after three months of fighting, and China agreed to a ceasefire in May 1841.

The British fleet returned to the mouth of the Yangtze and captured the strategic port of Ningbo in October. After repelling Chinese attempts to recapture the place in the spring of 1842, the British sought to strike a blow to prevent a prolonged conflict on land.

They set their sights on Zhenjiang, a city near Nanking where the southern end of the Grand Canal, the most important communication route between the north and south of China, was located. In July, the fall of Zhenjiang led to the closure of the Grand Canal. Faced with the threat to Nanking and the impossibility of navigating the Grand Canal to supply the Chinese troops from the north, the imperial authorities had to capitulate.

Peace negotiations between the British and the Chinese resulted in the signing of the Treaty of Nanking on 29 August 1842 aboard a British warship, HMS Cornwallis , supplemented by two other treaties.

Signing of the Treaty of Nanking.

The clauses of these three treaties recognize the following rights for the British:

  • The transfer of Hong Kong, which will become a military and economic center;
  • Five ports were opened , namely Xiamen, Canton, Fuzhou, Ningbo and Shanghai. The British were granted the right to settle in these ports and live there with their families (for merchants). The Treaty of Humen authorized the construction of buildings in these ports;
  • War compensation (expenses + opium) of 21 million yuan, or 1/3 of the imperial government’s revenue, to be paid over a four-year period;
  • Customs : British traders are subject to the payment of customs duties fixed by mutual agreement between the Chinese and the British;
  • Consular jurisdiction law : in the event of a dispute between a Chinese and a British person, a British court will decide on the basis of British laws;
  • Most-favored-nation clause : If China signs a treaty with another power, the privilege granted to the nation in question will also be granted to the United Kingdom.

The United States and France, in 1842, demanded the same privileges as those granted to the United Kingdom. By the Treaty of Wangxia (village near Macao) the Americans obtained them. By the Treaty of Whapoa, in 1844, the French as much. Added to this was the right to build churches, to establish cemeteries and finally, to evangelize. The Chinese would strongly resist in the applying the Treaty of Nanking.

b) Second Opium War (1856-1860)

In 1854, France, the United Kingdom, and the United States contacted the Chinese authorities and requested revisions of the treaties to enter Canton without resistance, expand trade to northern China and along the Yangtze River, legalize the opium trade, and deal with the court directly in Beijing. The imperial court rejected all requests for revisions.

On October 8, 1856, Chinese officers boarded the Arrow, a British ship registered in Hong Kong under the British flag, suspected of piracy and opium trafficking. They captured the twelve crewmen (Chinese) and imprisoned them. The British officially requested the release of these sailors, citing the emperor’s promise to protect British ships, without success. The British then referred to « the insult made to the British flag » by the soldiers of the Qing Empire.

They decided to attack Canton and the surrounding forts. Ye Mingchen, then governor of Guangdong and Guangxi provinces, ordered the Chinese soldiers stationed in the forts not to resist.

Corpses of Chinise soldiers at Fort Taku.

American warships bombarded Canton. But the people of Canton and soldiers resisted the attack and forced the attackers to retreat towards Humen. The British parliament demanded reparations from China for the Arrow incident and asked France, the United States and Russia to participate in a multinational intervention. Russia sent its diplomats, without participating militarily.

  • The Second Opium War began in earnest at the end of 1857.
  • On December 28, 1857, the combined fleets of England and France stormed Canton;
  • On March 16, 1858, French Admiral Rigault de Genouilly left Canton with the squadron for northern China;
  • On May 20, 1858, acting in concert with the English, he seized the forts of Takou at the mouth of the Peïho before going up to Tianjan (Tien-Tsin) in the direction of Beijing;
  • On June 24, 1859, Franco-English forces attempted to enter Tianjin;
  • On September 2, 1860, Tianjin was taken.
Treaty of Tien-Tsin.

On June 12, 1858, the British, French, Americans and Russians negotiated the Treaty of Tien-Tsin. (today Tianjin) containing the following clauses:

  1. The British, French and Americans will have the right to establish permanent delegations in Beijing (a city forbidden to many foreigners until then);
  2. Eleven more Chinese ports (see Article XI of the treaty) will be opened to foreign trade (including Yingkou, Danshui, Hankou and Nanking);
  3. Foreign ships (even military ones) will be able to navigate the Yangzi Jiang without control;
  4. Foreigners may travel to the interior regions of China for the purpose of trading, sending missionaries, or any other purpose;
  5. China shall pay an indemnity to England and France of 2 million silver taels each, and compensation to English merchants of another 2 million;
  6. Official letters and documents between China and the United Kingdom shall exclude the character « 夷 » or « yi » meaning « barbarians » when referring to subjects of the British Crown and its officials;
  7. Legalization of opium by China, the illegality of which had not been called into question by the Treaty of Nanking.

The clause providing for the establishment of foreign legations in Beijing met with fierce opposition in the capital, and once Western troops had withdrawn from the forts near Tianjin, the Qing showed no intention of complying with it. They strengthened their fortifications and repelled Western troops who nevertheless managed to reach Beijing. The emperor fled to Rehe, the imperial winter residence, 225 km north of Beijing.

Sacking of the Summer Palace by French and British troops.

A skirmish along the way, coupled with unusually brutal treatment of Western prisoners, prompted them to plunder the Yuan Ming Yuan, the summer palace northwest of the capital that the Jesuits had built for Qianlong just over a century earlier.

It was not just one building, but a vast complex with 200 buildings and beautiful gardens. What could not be taken was smashed into pieces. After a long week of looting and destruction, when Beijing fell, the complex was burned down on October 17.

Map of Summer Palace.
Ruins of the Beijing Summer Palace.
Cartoon of the French engraver Honoré Daumier: « So! Comrade … is this (french wine) not better than O…O…Opium? I will civilize you, Guy! »
Poster celebrating British heroism.

On October 24, 1860, China surrendered. It then signed the Convention of Peking, which ratified the Treaty of Tientsin and ended the Second Opium War.

Convention of Peking.

The Beijing Convention includes the following clauses:

  • China’s recognition of the validity of the Treaty of Tianjin;
  • The opening of Tianjin as a commercial port;
  • The perpetual cession of the south of the Kowloon Peninsula (south of today’s Boundary Street) to the United Kingdom, as well as Ngong shuen chau (called in English, Stonecutters Island), which significantly enlarged the colony of Hong Kong; La Grande-Elle obtained in 1898 a 99-year lease on the New Territories (952 km² constituting 80% of Hong Kong territory) and on 235 islands off the coast of Hong Kong.
  • Freedom of worship in China for Christians;
  • Allowing British ships to take Chinese labour to the Americas;
  • The payment to the British and the French of an indemnity amounting to eight million taels of silver (about 320 tons) for each country;
  • The transfer to the Russian Empire of Outer Manchuria and Ussuri Krai, largely creating the present-day Primorsky Krai, corresponding to the territory of the former Manchu province in Eastern Tartary;
  • The opening of the port of Shamian Island, in Canton, to foreign trade and the completion by the Canton authorities of the construction of the British factory

The Qing government was also forced to sign treaties with Russia, ceding over 1.5 million square kilometers of territory in the northeast and northwest, particularly in Outer Manchuria.

French cartoon (published after the start of Japanese agression of 1894), showing foreign powers carving up china as a pie.

Other conflicts followed, followed by other unequal treaties:

  • the first Sino-Japanese war of 1894;
  • the invasion of the Eight-Country Alliance to suppress the Boxer Rebellion in 1901;
  • Treaty of Versailles in 1921;
  • Second Sino-Japanese War of 1937

11. Hong Kong and the Birth of HSBC

Thomas Sutherland.

Following the Opium War, the British opium dynasties thought of only one thing: getting rich from the now legal sale of opium. Jardine, before his death in 1843, launched a subscription among his clients to create such a bank. However, following persistant acts of Chinese resistance, the Indian producers had seen the value of their assets collapse…

It was not until 1865 that Thomas Sutherland established HSBC.

As tai-pan (top managers) of Jardine Matheson & Company, the Keswick family was closely associated with the development of Hong Kong and the management of HSBC, the Indo-China Steam Navigation Company Ltd, the Canton Insurance Office Ltd (now HSBC Insurance Co), the Hongkong and Kowloon Wharf and Godown Company Limited, the Star Ferry, the Hong Kong Tramway, the Hong Kong Land Investment and Agency Co Ltd and the Hongkong and Whampoa Dock Co Ltd.

Hong Kong office of HSBC in 1901.

In the French economic daily Les Echos of July 18, 2013, business historian Tristan Gaston-Breton , outlines the take-off of Hong Kong thanks to the opium trade:

The island also hosted a large merchant community from India, which founded powerful trading houses there. It controlled the opium traffic from Bengal, which was resold to European trading houses in exchange for manufactured goods. Linked together by all sorts of business relationships, Europeans, Indians and Chinese participated in the same commercial networks and the same traffic.

As early as 1847, the P&O took over part of the opium trade now under British control. In 11 years, it transported 642,000 chests of opium from Bengal and Malaya to Europe despite competition from Jardine & Matheson’s Apcar Line.

The Peninsular and Oriental Steam Navigation Company (P&O) was a shipping company founded in London in 1837 by two British businessmen. Since 2006 it became part of the Emirati company Dubai Ports World (DP World).

Sutherland’s idea, Les Echos explains:

12. Conclusion

Jardine’s main office in Hong Kong.

Any sensible person who examines the contents of the « unequal treaties » that were imposed on China will quickly understand to what extent this period is for her a « century of humiliation. »

The label « Opium War » turns out to be a very reductive title since it was, through brutal « gunboat diplomacy », a clear attempt at colonization with a view to perpetuating a monetarist system which carries war within it like clouds carry storms.

Certainly, the Chinese and the British should and could have invented an alternative to the pitfalls of the financial and commercial mechanisms of their time.

Just as we must do today by creating, with the BRICS, an alternative to the current system before it plunges us back into an international conflict.

The English could have invited the Chinese to India to explain how to grow tea there! It was not until the end of the EIC monopoly in 1834 that it became seriously interested in tea growing in India.

To succeed, the EIC had to send Robert Fortune, a botanist, as a spy to bring back from China the tea that would make Darjeeling in India in 1856. The EIC would then grow tea in Ceylon (Sri Lanka) from 1857.

The current system has already made the choice of drugs. The highest officials of the UN acknowledged that in 2008, at the beginning of the great financial crisis that continues to weigh us down, the interbank market was able to remain liquid thanks to the acceptance of billions of dollars coming from crime, corruption and drugs.

The Jardines and Keswicks, who have given up opium, continue to make their fortunes in British tax havens. The Jardines firm, which is worth a hundred billion dollars, is now a Hong Kong company domiciled in Bermuda, and Matheson & Co., Ltd., is a London merchant bank.

Like HSBC, these families remain active supporters of the Royal Institute of International Affairs (RIIA or Chatham House), the pinnacle of the international financial oligarchy headquartered in London.

In 2012, HSBC Bank, set up by the gentlemen traffickers and their descendants and caught red-handed laundering billions of dollars for Al-Qaeda and the Mexican drug cartels that control a substantial portion of the cocaine and fentanyl trafficking in the United States, was saved thanks to the direct intervention of the British Finance Minister who argued that the banking license of a bank as large as HSBC could not be suspended without causing a crash of the entire global economy. As said before, from « too big-to-fail », they became « too big-to-jail ».

HSBC former office in Shanghai, China.

HSBC, after paying a fine, continues its shady activities, as denounced by the International Consortium of Journalists. It is an « untouchable » bank because it is kind enough to buy the Treasury bonds that allow France to « roll over » its never ending debt.

13. Biography

  • Cantón Álvarez, José Antonio, The sulphurous opium war , Le Monde Histoire & Civilisations, 2020;
  • Lovell, Julia, The Opium War, 1832-1842, Buchet-Chastel, 2017;
  • Waley-Cohen, Joanna, The Sextants of Beijing, Presses universitaires de Montréal, 2002;
  • Travis-Hanes III, W., Sanello, Frank, The Opium Wars, The Addiction of One Empire and the Corruption of another, Sourcebooks, Inc., 2002;
  • Executive Intelligence Review, Dope, Inc., 1976, 1986;
  • Cartwright, Mark, Fall of the British East India Company , World Encyclopedia, 2022;
  • China365, How the Opium Wars Made China What It Is Today, China365 website;
  • Les Crises, file The Opium Wars in China, November 2012;
  • Paulès, Xavier, The Opium Wars in China , University of Geneva, Chuan Tong International website.
  • Tual, Jacques, Indian Opium and British Imperialism at the Beginning of the 20th Century: The Case of Ceylan, Centre for Research on Travel Literature (CRLV), 2008;
  • Desmaretz, Gérard, The Opium Wars in China , Agoravox, 2024;
  • Chouvy, Pierre-Arnaud, Opium in globalization: the case of the Golden Triangle, Erudit, 2016;

Merci de partager !

Jacob Fugger « The Rich », father of financial fascism

Lire cet article en FR

Bribery and elections

In the « good old days » of the Roman Empire, things were so much simpler! Already in Athens but on a much larger scale in Rome, electoral bribery was big business. In the late Republic, lobbies coordinated schemes of bribery and extortion. Large-scale borrowing to raise money for bribes is even said to have created so much financial instability that it contributed to the 49–45 BC civil war. Roman generals, once they had systematically massacred and looted some distant colony and sold for hard cash their colonial loot, could simply buy the required number of votes, always decisive to elect an emperor or endorse a tyrant after a coup d’Etat. Legitimacy was always post-factum those days.

In Rome, the “elections” became an obscene farce to the point that they were eliminated. “A blessing from heaven”, said the statesman Quintus Aurelius Symmachus, rejoicing that “the hideous voting tablet, the crooked distribution of the seating places in the theater among the clients, the venal run, all of these are no more!”

The Holy Roman German Empire

Reviving such a degenerate and corrupt imperial system wasn’t a bright idea. On 25 December 800, Pope Leo III crowned Charlemagne as Roman emperor, reviving the title in Western Europe more than three centuries after the collapse of the ancient Western Roman Empire in 476 DC.

In 962 DC, when Otto I was crowned emperor by Pope John XII, he fashioned himself as Charlemagne’s successor, and inaugurated a continuous existence of the empire for over eight centuries. In theory the emperors were considered the primus inter pares (“first among equals”) of all Europe’s Catholic monarchs. In practice, the imperial office was traditionally elective by the mostly German prince-electors.

Just as the vote of the Roman Senate was necessary to “elect” a Roman Emperor, in the Middle Ages, a tiny group of prince-electors had the privilege of “electing” the “King of the Romans.” Once elected in that capacity, this elected king would then be crowned Emperor by the pope.

The status of prince-elector had great prestige. It was considered to be behind only the emperor, kings, and the highest dukes. The prince-electors held exclusive privileges that were not shared with other princes of the Empire, and they continued to hold their original titles alongside that of prince-electors.

In 1356, the Golden Bull, a decree carrying a golden seal, issued by the Imperial Diet at Nuremberg and Metz headed by the Emperor of that time, Charles IV, fixed the protocols and rules of the imperial power system. While limiting their power, the Golden Bull granted the great-electors the Privilegium de non appellando (“privilege of not appealing”), preventing their subjects from lodging an appeal to a higher Imperial court, and turning their territorial courts into courts of last resort.

However, imposing such a superstructure everywhere was no mean feat. With Jacques Cœur, Yolande d’Aragon and Louis XI, France increasingly asserted itself as a sovereign, anti-imperial nation-state.

Therefore, the Holy Roman Empire, by a decree adopted at the Diet of Cologne in 1512, became the “Holy Roman Empire of the Germanic Nation,” a name first used in a document in 1474. The adoption of this new name coincided with the loss of imperial territories in Italy and Burgundy to the south and west by the late XVth century, but also aimed to emphasize the new importance of the German Imperial Estates in ruling the Empire. Napoleon was supposedly the one who said the Holy Roman German Empire was triply misnamed and none of the three. It was “too debauched” to be holy, “too German” to be Roman and “too weak” to be an Empire.

In light of the object of this article, we will not expand here on this subject. Noteworthy nevertheless, the fact that German Nazi Party propaganda, as early as 1923, would identify the Holy Roman Empire of the Germanic Nation as the « First » Reich (Reich meaning empire), with the German Empire as the « Second » Reich and what would eventually become Nazi Germany as the « Third » Reich.

Hitler had a soft spot for Fugger’s hometown Augsburg and wanted to make it the “City of German Businessmen”. To honor the Fugger family, he wanted to convert their Palace into a huge trade museum. To break the Fuhrer’s moral, the building got severely bombed in February 1942.

The Prince Electors

By the XVIth Century, the Holy Roman Empire consisted of 1,800 semi-independent states spread across Central Europe and Northern Italy. In a nod to the ancient Germanic tradition of electing kings, the medieval emperors of this sprawling patchwork of disparate territories were elected

What we do know is that, from the Golden Bull of 1356 onward, the emperor was elected in Frankfurt by an “electoral college” of seven “Prince-electors” (Kurfürst in German):

  • the archbishop of Mainz, arch-chancellor of Germany;
  • the archbishop of Trier, arch-chancellor of Gallia (France);
  • the archbishop of Cologne, arch-chancellor of Italy;
  • the duke of Saxony;
  • the count palatine of the Rhine;
  • the margrave of Brandenburg;
  • and the king of Bohemia.

Of course, to obtain the vote of these great electors, candidates had to deliver oral and in advance written promises and engagements, and especially, on (and under) the table, offer privileges, power, money and more.

Hence, the most difficult endeavor for any aspiring candidate, was to raise the bribery money to buy the votes. As a result, the very existence and survival of the Holy Roman German Empire, depended nearly entirely on the existence, survival and especially goodwill of a financial oligarchy of wealthy merchant banking families willing to lend the money to the bribers. Just as a handful of giant banks are controlling western nations today by buying their emissions of state bonds required to bail-out and refinance permanent but growing debt bubbles, the banking monopolies of those days became very rapidly too-big-to-fail and too-big-to-jail.

The financial power and influence of the Bardi, Peruzzi and other Medici bankers, who, by ruining the European farmers plunged Europe in great famine creating the conditions for the XIVth Century’s “Black Death” wiping out between 30 and 50 percent of the European population, is no secret and has been aptly documented by a friend of mine, the American financial analyst, Paul Gallagher.

Fucker Advenit

Augsbourg.

Here, we’ll focus on the activities of two German banking families who dominated the world in the early XVIth century: the Fuggers and the Welsers of Augsburg.

Unlike the Welsers, and old patrician family about we will say more later, the Fugger’s’ success story begins in 1367, when “master weaver” Hans Fugger (1348-1409) moved from his village of Graben to the “free imperial city” of Augsburg, a four-hour walk away. The Augsburg tax register reads “Fucker Advenit” (Fugger has arrived). In 1385, Hans was elected to the leadership of the weavers’ guild, which gave him a seat on the city’s Grand Council.

Augsburg, like other free and imperial cities, was not subject to the authority of any prince, but only to that of the emperor himself. The city was represented at the Imperial Diet, controlled its own trade and allowed little outside interference.

German merchants.

In Renaissance Germany, few cities matched Augsburg’s energy and effervescence. Markets overflowed with everything from ostrich eggs to saints’ skulls. Ladies brought falcons to church. Hungarian cow-boys drove cattle through the streets. If the emperor came to town, knights jousted in the squares. If a murderer was arrested in the morning, he was hanged in the afternoon for all to see. Beer flowed as freely in the public baths as it did in the taverns. The city not only authorized prostitution, it also maintained brothels

Initially, the Fugger’s commercial profile was very traditional: fabrics made by local weavers were bought and sold at fairs in Frankfurt, Cologne and, over the Alps, Venice. For a weaver like Hans Fugger, this was the “ideal time” to come to Augsburg. An exciting innovation was taking hold throughout Europe: fustian, a new type of fabric perhaps named after the Egyptian town of Fustat, near Cairo, which manufactured this material before its production spread to Italy, southern Germany and France.

Medieval fustian was a sturdy canvas or twill fabric with a cotton weft and a linen, silk or hemp warp, one side of which was lightly woolen. Lighter than wool, it became very much in demand, particularly for a new invention: underwear. While linen and hemp could be grown almost anywhere, in the late Middle Ages, cotton came from the Mediterranean region, from Syria, Egypt, Anatolia and Cyprus, and entered Europe via Venice.

From Jacob the Elder to « Fugger Bros »


In Augsburg, Hans had two children: Jacob, known as “Jacob the Elder” (1398-1469) and Andreas Fugger (1394-1457). The two sons had different and opposing investment strategies. While Andreas went bankrupt, Jacob the Elder cautiously expanded his business.

After Jacob the Elder’s death in 1469, his eldest son Ulrich Fugger (1441-1510), with the help of his younger brother Georg Fugger (1453-1506), took over the management of the company.

Gradually, profits were invested in far more profitable activities: precious stones, goldsmithery, jewelry and religious relics such as martyrs’ bones and fragments of the cross; spices (sugar, salt, pepper, saffron, cinnamon, alum); medicinal plants and herbs and, above all, metals and mines (gold, silver, copper, tin, lead, mercury) which, as collateral enabled the expansion of credit and monetary issuance.

The Fugger forged close personal and professional ties with the aristocracy. They married into some of the most powerful families in Europe – in particular, the Thurzos of Austria. Their activities spread throughout central and northern Europe, Italy and Spain, with branches in Nuremberg, Leipzig, Hamburg, Lübeck, Frankfurt, Mainz and Cologne, Krakow, Danzig, Breslau and Budapest, Venice, Milan, Rome and Naples, Antwerp and Amsterdam, Madrid, Seville and Lisbon.

Jacob Fugger « The Rich »

Jacob Fugger « The Rich ».

In 1473, another brother, the youngest of the three, Jacob Fugger (later known as “the Rich”) (1459-1525), aged 14 and originally destined for an ecclesiastical career, was sent to Venice, then “the world’s most trading city”. There, he was trained in commerce and book accounting. Jacob returned to Augsburg in 1486 with such admiration for Venice that he liked to be called “Jacobo” and never let go of his Venetian gold beret. Later, with a certain sense of irony, he called the accounting techniques he learned in Venice “The art of enrichment”. The humanist Erasmus of Rotterdam seems to have wanted to respond to him in his colloquium “The friend of lies and the friend of truth”.

The importance of information

In Venice, Jacob assimilated Venetian (Roman Empire) methods to succeed:

  • organize a private intelligence service;
  • impose a monopoly on strategic goods and products;
  • alternate between intelligent corruption and blackmail;
  • push the world to the brink of bankruptcy to make bankers such as Fugger indispensable.

Jacob Fugger recognized the importance of information. To be successful, he has to know what’s going on in the seaports and trading centers. Eager to gain every possible business advantage, Fugger set up a private mail courier designed to transmit news — such as “deaths and results of battles” — exclusively to him, so that he would have it before anyone else, especially before the emperor.

Jacob the Elder and his wife. Rich in terms of money, poor of love and no children.
Wealth and Power paying tribute to Jacob Fugger.

Jacob Fugger financed any project, person or operation that meets his long-term objectives. But always under strict conditions set by him, and always to impose himself on others. The prevailing principle was do ut des, in other words, “I give, I can receive”. In exchange for every loan, collateral such as metal production, mining concessions, state financial inflows, commercial and social privileges, tax and customs exemptions, and high positions in key institutions, were demanded. And with the increase in the sums advanced, the increase in the quid pro quos demanded by Fugger.

If “modern” capitalism is the dictatorship of private monopolies at the expense of free competition, it’s safe to say that he truly is its founder.

The most important thing he learned in Venice? To always be prepared to sacrifice short-term financial gains, and even to offer financial profits to his victims, in order to demonstrate his solvency and ensure his long-term political control. In the absence of national or public banks, popes, princes, dukes and emperors depended heavily, if not entirely, on an oligopoly of private bankers. When an Austrian emperor, whose banker he was, wanted to impose a universal tax, Fugger sank the project because it reduced his dependence on bankers!

A Venetian ambassador, discovering that Jacob had learned his trade in Venice, confessed:

Europe seen through the eyes of Fugger with the axis Venice (north), Augsburg, Nuremberg, Antwerpen (south).

Antwerp and Venice

The three Fugger brothers were aware of the key role played by Venice and Antwerp in the copper trade, with Augsburg, along with Nuremberg, right in the middle of the trade corridor connecting them.

Antwerp
1503 marked the beginning of the Portuguese activities of the House of Fugger in Antwerp, and in 1508 the Portuguese made Antwerp the base of their colonial trade.

Antwerp stock exchange.

In 1515, Antwerp established Europe’s first stock exchange, a model for London (1571) and Amsterdam (1611). Copper, pepper and debts were traded. The purchase of a cargo of pepper was settled ¾ in gold, ¼ in copper. First Venice, then Portugal and Spain, depended on Fugger for silver and copper.

Venice
The firm exported copper and silver from Tyrol to Venice, and imported luxury goods, fine textiles, cotton and, above all, Indian and Oriental spices from Venice. After much effort, on November 30, 1489, the Venetian Council of State confirmed the Fugger’s permanent possession of their room in the “Fondaco dei Tedeschi”, the German merchants’ warehouse on the Grand Canal, on whose upkeep and decoration they spent considerable sums.

“Fondaco dei Tedeschi”, the German merchants’ warehouse on the Grand Canal.

At the beginning of the XVIth century, Nuremberg merchants shared with Augsburg merchants the monopoly of what was the most important German trading post. During the meals taken in common, required by the rules, they officially presided over the table with their colleagues from Cologne, Basel, Strasbourg, Frankfurt and Lübeck.

Well-known merchant families traded in the Fondaco dei Tedeschi, including the Imhoff, Koler, Kref, Mendel and Paumgartner families from Nuremberg, and the Fugger and Höchstetter families from Augsburg. Merchants mainly imported spices from Venice: saffron, pepper, ginger, nutmeg, cloves, cinnamon and sugar.

“Fondaco dei Tedeschi”, interior court.

The Nuremberg stock exchange served as a commercial link between Italy and other European economic centers. Foods known and appreciated in the Mediterranean region, such as olive oil, almonds, figs, lemons and oranges, jams and wines like Malvasia and Chierchel found their way from the Adriatic Sea to Nuremberg.

Other valuable products included corals, pearls, precious stones, Murano glassware and textiles such as silk fabrics, cotton and damask sheets, velvet, brocade, gold thread, camelot and bocassin. Paper and books completed the list.

In the years that followed, “Ulrich Fugger & Brothers” dealt in Venetian bills of exchange with the Frankfurt company Blum, and sources frequently mention the company’s branch on the Rialto as an outlet for copper and silver, a center for the purchase of luxury goods and a clearing station for transfers to the Roman curia.

The World changes

Fugger’s involvement in the international metal trade: silver (dark gray); copper (red); lead (blue) and mercury (olive green).

In 1498, six years after Christopher Columbus’s voyage to America, Vasco da Gama (1460-1524) was the first European to find the route to India, bypassing Africa. This enabled him to set up Calicut, the first Portuguese trading post in India. The opening of this sea route to the East Indies by the Portuguese deprived the Mediterranean trade routes, and thus South Germany, of much of their importance. Geographically, Spain, Portugal and the Netherlands gained the upper hand.

Jacob Fugger, always in the know before anyone else, decided to adapt to the new realities and relocated his colonial business from Venice to Lisbon and Antwerp. He took advantage of the opportunity to open up new markets such as England, without abandoning markets such as Italy. He took part in the spice trade and opened a factory in Lisbon in 1503. He was authorized to ship pepper, other spices and luxury goods such as pearls and precious stones via Lisbon.

Along with other German and Italian trading houses, Fugger contributed to a fleet of 22 Portuguese ships led by the Portuguese Francisco de Almeida (1450-1510), which sailed to India in 1505 and returned in 1506. Although a third of the imported goods had to be sold to the King of Portugal, the operation remained profitable. Impressed by the financial returns, the King of Portugal made the spice trade a royal monopoly, excluding all foreign participation, in order to reap the full benefits. However, the Portuguese still depended heavily on the copper supplied by Fugger, a key product for trade with India.

Fugger, tricks and tactics

Let’s summarize the “genius” and some of the tricks that enabled Jacob Fugger to become “the rich” at the expense of the rest of humanity.

1. Bail me out, baby

In 1494, the Fugger brothers founded a trading company with a capital of 54,385 florins, a sum that doubled two years later when, in 1496, Jacob persuaded Cardinal Melchior von Meckau (1440-1509), Prince-Bishop of Brixen (today’s Bressanone in the Italian Tyrol), to join the company as a “silent partner” in the expansion of mining activities in Upper Hungary. In total secrecy, and without the knowledge of his ecclesiastical chapter, the prince-Bishop invested 150,000 florins in the Fugger company in exchange for a 5% annual dividend. While such “discreet transactions” were quite common among the Medici, profiting from interest rates remained a sin for the church. When the prince-bishop died in Rome in 1509, this investment scheme was discovered. The pope, the bishopric of Brixen and the Meckau family, all claiming the inheritance, demanded immediate repayment of the sum, which would have led to Jacob Fugger’s insolvency. It was this situation that prompted Emperor Maximilian I to intervene and help his banker. Fugger came up with the formula.

Provided he helped Pope Julius II in a small war against the Republic of Venice, only the Hapsburg monarch was recognized as Cardinal Melchior von Meckau’s legitimate heir. The inheritance could now be settled by paying off outstanding debts. Fugger was also required to deliver jewels as compensation to the Pope. In exchange for his support, however, Maximilian I demanded continued financial backing for his ongoing military and political campaigns. A way of telling the Fugger: “I’m saving you today, but I’m counting on you to save me tomorrow…”.

2. Buy me a pope and the Vatican, baby

Raimondi, Marcantonio, Pope Julius II.

In 1503, Jacob Fugger contributed 4,000 ducats (5,600 florins) to the papal campaign of Julius II and greased the cardinals’ palms to get this “warrior pope” elected. To protect himself and the Vatican, Julius II requested 200 Swiss mercenaries. In September 1505, the first contingent of Swiss Guards set out for Rome. On foot and in the harshness of winter, they marched south, crossed the St. Gotthard Pass and received their pay from the banker… Jacob Fugger.

Julius showed his gratitude by awarding Fugger the contract to mint the papal currency. Between 1508 and 1524, the Fugger leased the Roman mint, the Zecca, manufacturing 66 types of coins for four different popes.

3. Business first, baby

In 1509, Venice was attacked by the armies of the League of Cambrai, an alliance of powerful European forces determined to break Venice’s monopoly over European trade. The conflict disrupted the Fuggers’ land and sea trade. The loans granted by the Fugger to Maximilian (a member of the League of Cambrai) were guaranteed by the copper from the Tyrol exported via Venice… The Fugger’s sided with Venice without falling out with a happy Maximilian.

4. Buy me a hitman, baby

Fugger had rivals who hated him. Among them, the Gossembrot brothers. Sigmund Gossembrot was the mayor of Augsburg. His brother and business partner, George, was Maximilian’s treasury secretary. They wanted mining revenues to be invested in the real economy, and advised the emperor to break with the Fugger. Both brothers died in 1502 after eating black pudding. The great Fugger historian Gotried von Pölnitz, who has spent more time in the archives than anyone else, wonders whether the Fugger ordered the assassination. Let’s just say that absence of proof is not proof of absence.

5. Your mine is mine, baby

Copper mining in the XVIth century.

The time between 1480 and 1560 was the “century of the metallurgical process.” Gold, silver and copper could now be separated economically. Demand for the necessary mercury for the separation process grew rapidly. Jacob, aware of the potential financial gains it offered, went from textile trade to spice trade and then into mining.

Sigismund Archduke of Austria.

Therefore, he headed to Innsbruck, currently Austria. But the mines were owned by Sigismund Archduke of Austria (1427-1496), a member of the Habsburg family and cousin of the emperor Frederick.

The good news for Jacob Fugger is that Sigismund was a big spender. Not for his subjects, but for his own amusement. One lavish party sees a dwarf emerge from a cake to wrestle a giant.

As a result, Sigismund was constantly in debt. When he ran out of money, Sigismund sold the production from his silver mine at knock-down prices to a group of bankers. To the Genoese banking family Antonio de Cavallis, for example. To get into the game, Fugger lends the Archduke 3,000 florins and receives 1,000 pounds of silver metal at 8 florins per pound, which he later sells for 12. A paltry sum compared with those lent by others, but a key move that opened his relations with Sigismund and above all with the nascent Habsburg dynasty.

In 1487, after a military skirmish with the more powerful Venice for control of the Tyrolean silver mines, Sigismund’s financial irresponsibility made him persona non grata with the big bankers. In despair, he turned to Fugger. Fugger mobilized the family fortune to raise the money the archduke demanded. An ideal situation for the banker. Of course, the loan was secured and subject to strict conditions. Sigismund was forbidden to repay it with silver metal from his mines, and had to cede control of his treasury to Fugger. If Sigmund repays him, Fugger walks away with a fortune. But, given Sigmund’s track record, the chance of him repaying is nil. Ignoring the terms of the loan, most of the other bankers are convinced that Fugger will go bankrupt. And indeed, Sigismund defaulted, just as Fugger… had predicted. However, as stipulated in the contract, Fugger seized “the mother of all silver mines”, the one in the Tyrol. By advancing a little cash, he gets his hands on a giant silver mine.

6. Buy my « Fugger Bonds », baby

Fuggerhaus, Augsbourg.

The way Fugger banking worked was that Fugger lent to the emperor (or another customer) and re-financed the loan on the market (at lower interest rates) by selling so-called “Fugger bonds” to other investors. The Fugger bonds were much sought after investments as the Fugger were regarded as “safe debtors”. Thus, the Fugger used their own superior credit standing in the market to secure financing for their customers whose credit rating was not as well regarded. The idea was – provided the emperor and the other customers honored their commitments – they would make a profit from the difference in interest between the loans the Fugger extended and the interest payable on the Fugger bonds.

7. Buy me an Emperor, baby

Hapsburg Emperor Maximilian I of Austria.

Sigismund was soon eclipsed by emperor Frederick IIIrd’s son, Maximilian of Austria (1459-1519), who had arranged to take power if Sigismund did not pay back money he owed him. (Fugger could have lent Sigismund the money to keep him in power but decided he’d prefer Maximilian in the position.)

Maximilian was elected “King of the Romans” in 1486 and ruled as the Holy Roman Emperor from 1508 till his death in 1519. Jacob Fugger supported Maximilian I of Habsburg in his accession to the throne by paying 800,000 florins. Laying the foundation for the family’s widely distributed landholdings, this time Fugger, as collateral, didn’t want silver, but land. So he acquired the countships of Kirchberg and Weissenhorn from Maximilian I in 1507 and in 1514, the emperor made him a count.

Unsurprisingly, Maximilian’s military conquests coincided with Jacob’s plans for mining expansion. Fugger purchased valuable land with the profits from the silver mines he had obtained from Sigismund, and then financed Maximilian’s army to retake Vienna in 1490. The emperor also seized Hungary, a region rich in copper.

Albrecht Dürer, The big canon.

A “copper belt” stretched along the Carpathian Mountains through Slovakia, Hungary and Romania. Fugger modernizes the country’s mines by introducing hydraulic power and tunnels. Jacob’s aim was to establish a monopoly on this strategic raw material, copper ore. Along with tin, copper is used in the manufacture of bronze, a strategic metal for weapons production. Fugger opened foundries in Hohenkirchen and Fuggerau (the family’s namesake in Carinthia, today in Austria), where he produced cannons directly.

8. Sell me indulgences, baby

Indulgence trading: on the left, a Fugger clerk, in the center the Dominican preacher Tetzel and on the right, on horseback, the archbishop of Mainz, Albrecht of Brandenburg.

In 1514, the position of Archbishop of Mainz became available. As we have seen, this was the most powerful position in Germany, with the exception of that of the emperor. Such positions require remuneration. Albrecht of Brandenburg (1490-1545), whose family, the Hohenzollerns, ruled a large part of the country, wanted the post. Albrecht was already a powerful man: he held several other ecclesiastical offices. But even he couldn’t afford to pay such high fees. So, he borrowed the necessary sum from the Fugger, in return for interest, which the convention of the time described as a fee for “trouble, danger and expense”.

Pope Leo X, having squandered the papal treasury on his coronation and organized parties where prostitutes looked after the cardinals, asked for 34,000 florins to grant Albrecht the title – roughly equivalent to $4.8 million today – and Fugger deposited the money directly into the pope’s personal account.

All that remained was to pay back the Fugger. Albrecht had a plan. He obtained from Pope Leo X the right to administer the recently announced “jubilee indulgences”. Indulgences were contracts sold by the Church to forgive sins, allowing believers to buy their way out of purgatory and into heaven.

But to fleece the sheep, as with any good scam, a “cover” or “narrative” was required. The motive, concocted by Julius II, was credible, claiming that St. Peter’s Basilica needed urgent and costly renovation.

Johann Tetzel.

In charge of the sale was a “peddler of indulgences”, the Dominican Johann Tetzel, who “carried Bibles, crosses and a large wooden box with […] an image of Satan on top”, and told the faithful that his indulgences “canceled all sins”. He even proposed a “progressive scale”, with the wealthy believers paying 25 florins and ordinary workers just one. Tetzel is quoted as saying: “When the money rattles in the box, the soul jumps out of purgatory”.

On the ground, in every church, Fugger clerks worked on site to collect the money, half of which went to the Pope and half to Fugger. At the same time, Fugger obtained a monopoly on the transfer of the funds obtained from the sale of indulgences between Germany and Rome.

If the archbishop was at the mercy of the Fugger, so too was Pope Leo X, who, to repay his debt, collected money through “simonies”, i.e. selling high ecclesiastical offices to princes. Between 1495 and 1520, 88 of the 110 bishoprics in Germany, Hungary, Poland and Scandinavia were appointed by Rome in exchange for money transfers centralized by Fugger. In this way, Fugger became “God’s banker, Rome’s chief financier”.

9. Buy me Martin Luther, baby

Since the IIIrd century, the Catholic Church asserted that God can be indulgent, granting total or partial remission of the penalty incurred following forgiveness of a sin. However, the indulgence obtained in return for an act of piety (pilgrimage, prayer, mortification, donation), notably in order to shorten a deceased person’s passage through purgatory, over time, turned into a lucrative business, used by Urban II to recruit enthusiastic faithful to the First Crusade.

In the XVIth century, it was this trade in indulgences that led to serious unrest and turmoil within the Church. Described as superstition by Erasmus in his “In Praise of Folly”, the denunciation of the indulgence trade was the very subject of Luther’s ninety-five arguments, the manifesto he nailed on the door of the Castle Church of Wittenberg and would lead the Church to division and to the Protestant Reformation. Refusing to travel to Rome to answer charges of heresy and of challenging the Pope’s authority, Luther agreed to present himself in Augsburg in 1518 to the papal legate, Cardinal Cajetan. The latter urged Luther to retract or reconsider his statements (“revoca!”).

Although Luther had denounced Fugger by name for his central role in the indulgence swindle, he agreed to be interrogated in the central office of the bank that organized the crime he denounced!

Luther seems to have been aware that, verbal accusations aside, the Fuggers would protect and promote him rather than face a much more reasonable call for reform from Erasmus and his followers. While he could have been arrested and burned at the stake as some demanded, Luther showed up, refused to backtrack on his statements and left unscathed.

10. Buy them poverty, baby

In the XVIth century, prices increased consistently throughout Western Europe, and by the end of the century prices reached levels three to four times higher than at the beginning. Recently historians have grown dissatisfied with monetary explanations of the sixteenth-century price rise. They have realized that prices in many countries began to rise before much New World gold and silver entered Spain, let alone left it, and that probable treasure-flows bear little relation to price movements, including in Spain itself.

In reality, in the late fifteenth and early sixteenth century European populations began to expand again, recovering from that long era of contraction initiated by the Black Death of 1348. Growing populations produced rising demands for food, drink, cheap clothing, shelter, firewood, etc., all ultimately products of the land. Farmers found it difficult to increase their output of these things: food prices, land values, industrial costs, all rose. Such pressures are now seen as an important underlying cause of this inflation, though few would deny that it was stimulated at times by governments manipulating the currency, borrowing heavily, and fighting wars.

The “Age of the Fuggers” was an age where money was invested in more money and financial speculation. The real economy was looted by taxes and wars.

The dynamic created by the collapse of the living standards, taxes and price inflation for most of the people and the public exposure of corruption of both the Church and the aristocracy, set the scene for riots in many cities, the German “Peasant war,” an insurrection of weavers, craftsmen and even miners, ending with the “Revolt of the Netherlands” and centuries of bloody “religious” wars that only terminated with the “funeral” of the Empire by the Peace of Westphalia in 1648.

11. Buy them social housing, baby

Fuggerei.

Jacob Fugger’s initiative, in 1516, to start building the Fuggerei, a social housing project for a hundred working families in Augsburg, rather unique for the day, came as “too little and too late,” when the firm’s image became under increasing attacks. The Fuggerei survived as a monument to honor the Fugger. The rent remained unchanged, it still is one Rhenish gulden per year (equivalent to 0.88 euros), three daily prayers for the current owners of the Fuggerei, and the obligation to work a part-time job in the community. The conditions to live there, akin to the Harz4 measures, remain the same as they were 500 years ago: one must have lived at least two years in Augsburg, be of the Catholic faith and have become indigent without debt. The five gates are still locked every day at 10 PM.

12. Buy me rates worth an interest, baby

Pope Leon X.

“You shall not charge interest.” In 1215 Pope Innocent III explicitly confirmed the prohibition on interest and usury decreed in the Bible. The line from Luke 6:35, “Lend and expect nothing in return,” was taken by the Church to mean an outright ban on usury, defined as the demand for any interest at all. Even savings accounts were considered sinful. Not Jacob Fugger’s ideal scenario. To change this, Fugger hired a renowned theologian Johannes Eck (1494-1554) of Ingolstadt to argue his case. Fugger conducted a full-on public relations campaign, including setting up debates on the issue, and wrote an impassioned letter to Pope Leo.

As a result, Leo issued a decree proclaiming that charging interest was usury only if the loan was made “without labor, cost or risk” — which of course no loan ever really is. More than a millennium after Aristotle, Pope Leo X found that risk and labor involved with safeguarding capital made money lending “a living thing.” As long as a loan involved labor, cost, or risk, it was in the clear. This opened a flood of church-legal lending: Fugger’s lobbying paid off with a fortune. Fugger persuaded the Church to permit an interest of 5% – and he was reasonably successful: charging interest was not allowed, but it wasn’t punished either.

Thanks to Leon X, Fugger was now able to attract cash by offering depositors a 5% return. As for loans, according to the Tyrolean Council’s report, while other bankers were lending Maximilian at a rate of 10%, the rate charged by Fugger, justified by “the risk”, was over 50%! Charles V, in the 1520s, had to borrow at 18%, and even at 49% between 1553 and 1556. Meanwhile, Fugger’s equity, which in 1511 amounted to 196,791 florins, rose in 1527, two years after Jacob’s death, to 2,021,202 florins, for a total profit of 1,824,411 florins, or 927% increase, which represents, on average, an annual increase of 54.5%.

Quinten Matsys, The usurers, 1520, Galleria Doria Pamphilj, Rome.

All this is presented today, not as usury, but as a “great advance” anticipating modern wealth and asset management practices…

Fugger “broke the back of the Hanseatic Ligue” and “roused commerce from its medieval slumber by persuading the pope to lift the ban on moneylending. He helped save free enterprise from an early grave by financing the army that won the German Peasants War, the first great clash between capitalism and communism,” writes Greg Steinmetz, historian and former Wall Street Journal correspondent.

Jewish ghetto in Venice, 1906.

13. Buy me an Austro-Hungarian empire, baby

When Turkey invaded Hungary in 1514, Fugger was gravely concerned about the value of his Hungarian copper mines, his most profitable properties. After diplomatic efforts failed, Fugger gave Maximilian an ultimatum — either strike a deal with Hungary or forget about more loans. The threat worked. Maximilian negotiated a marriage alliance that left Hungary in Hapsburg hands, leading to “redrawing the map of Europe by creating the giant political tinderbox known as the Austro-Hungarian Empire. Fugger needed a Hapsburg seizure of Hungary to protect his holdings.

14. Buy me a second emperor, baby

Emperor Charles V.

When Maximilian I, Holy Roman Emperor, died in 1519, he owed Jacob Fugger around 350,000 guilders. To avoid a default on this investment, Fugger organized a banker’s rally to gather all the bribery money allowing Maximilian’s grandson, Charles V, buying the throne.

If another candidate had been elected emperor, like King Francis I of France who suddenly tried to enter the scene, and would certainly have been reluctant to pay Maximilian’s debts to Fugger, the latter would have sunk into bankruptcy.

This situation reminds the modus operandi of JP Morgan, after the 1897 US banking crash and the banking panic of 1907. The “Napoleon of Wall Street,” afraid of a revival of a real national bank in the tradition of Alexander Hamilton, first gathered all the funds required to bail out his failing competitors, and then set up the Federal Reserve system in 1913, a private syndicate of bankers in charge of preventing the government of interfering in their lucrative business

Hence, Jacob Fugger, in direct liaison with Margaret of Austria, who bought into the scheme because of her worries about peace in Europe, in a totally centralized way, gathered the money for each elector, using the occasion to bolster dramatically his monopolistic positions, especially over his competitors such as the Welsers and the rising port of Antwerp.

According to the French historian Jules Michelet (1798-1874), Jacob Fugger energetically imposed three preconditions:

  1. The Garibaldi of Genoa, the Welsers of Germany and other bankers, could only partake in this scheme by making down-payments to Fugger and could only lend money [to Charles] through his intermediary;
  2. Fugger obtained promissory notes from the cities of Antwerp and Mechelen as collateral, paid for out of Zeeland tolls;
  3. Fugger got the city of Augsburg to forbid lending to the French. He requested Marguerite of Austria (the regent) to forbid the people of Antwerp from exchanging money in Germany for anyone.” (handing over de facto that lucrative business to the Augsburg bankers only…)
Hans Holbein the Younger, The Rich Man, 1526. When he died, death stole his money! Fugger “the Rich” died in 1525.

Now, as said before, people mistakenly think that Jacob “the Rich”, was “very rich.” Of course he was: today, he is considered to be one of the wealthiest people ever to have lived, with a GDP-adjusted net worth of over $400 billion, and approximately 2% of the entire GDP of Europe at the time, more than twice the fortune of Bill Gates.

If this was true or not and how wealthy he really was we will never know. But if you look at the capital declared by the Fugger brothers to the Augsburg tax authorities, it dwarfs by far the giant amounts being lent.

According to Fugger historian Mark Häberlein, Jacob anticipated modern day tax avoidance tricks by striking a deal with the Augsburg tax authorities in 1516. In exchange for an annual lump sum, the family’s true wealth… would not be disclosed. One of the reasons of course is that, just as BlackRock today, Fugger was a “wealth manager”, promising a return on investment of 5 percent while pocketing 14.5 percent himself… Cardinals and other fortunes would secretly invest in Fugger for his juicy returns.

Hence, it is safe to say that Fugger was very rich… of debts. And just as the IMF and a handful of mammoth banks today, by bailing out their clients with fictitious money, the Fuggers were doing nothing else than bailing out themselves and increasing their capacity to keep doing so. No structural reform on the table, only a liquidity crisis? Sounds familiar!

Charles’ unanimous selection by the Electors required exorbitant bribes, to the tune of 851,585 guilders, to smooth the way. Jacob Fugger put in 543,385 guilders, around two thirds of the sum. For the first time, the only collateral was Charles himself, ruling over most of the world and America.

It would take an entire book or a documentary to detail the amazing scope of bribes deployed for Charles’ imperial election, a well-documented event.

Just some excerpts from a detailed account:

15. Buy me zero regulation, baby

In 1523, under pressure from public opinion growing angry against the merchant houses of Augsburg, foremost of them the Fugger, the fiscal arm of the imperial Council of Regency brought an indictment against them. Some even brought up the idea of restricting trading capital of individual firms to 50,000 florins and limiting the number or their branches to three.

Acutely aware that such regulations would ruin him, Jacob Fugger, in panic, on April 24, 1523, wrote a short message to the Emperor Charles V, remembering his Majesty of his dependence on the good health of the Fugger bank accounts:

Charles Vth realized that the debt was not the issue of the message and immediately wrote to his brother Ferdinand, asking him to take measures to prevent the anti-monopoly trial. The imperial fiscal authorities were ordered to drop the proceedings. For Fugger and the other great merchants, the storm had passed.

16. Buy me Spain, baby

Of course, Charles V didn’t had a dime to pay back the giant Fugger loan that got him elected! Little by little, Fugger obtained his rights to continue mining metals – silver and copper – in the Tyrol, validated. But he got more, first in Spain itself and, quite logically, in the territories newly conquered by Spain in America.

17. Buy me America, baby

Firstly, to raise funds, Charles leased the income of the main territories of the three great Spanish orders of chivalry, known as Maestrazgos, for which the Fugger paid 135,000 ducats a year but got much more than what he spent for the lease.

Between 1528 and 1537, the Maestrazgos were administered by the Welsers of Augsburg and a group of merchants led by the Spanish head of the postal service Maffeo de Taxis and the Genoese banker Giovanni Battista Grimaldi. But after 1537, the Fugger took over again. The lease contract was very attractive for two reasons: first it allowed the leaseholders to export grain surpluses from these estates and second, it included the mercury mines of Alamadén, a crucial element both for the production of mirror glass, the processing of gold and medical applications.

Now, as the Fugger depended on gold and silver shipments from America to recover their loans to the Spanish crown, it appeared logical for them to set their eyes on the New World, as well.

18. Buy me Venezuela, baby

Let us now enter the Welsers whose history can be traced back to the XIIIth century, when its members held official positions in the city of Augsburg. Later, the family became widely known as prominent merchants. During the XVth century, when the brothers Bartholomew and Lucas Welser carried on an extensive trade with the Levant and elsewhere, they had branches in the principal trading centers of southern Germany and Italy, and also in Antwerp, London, and Lisbon. In the XVth and XVIth centuries, branches of the family settled at Nuremberg and in Austria.

As a reward for their financial contributions to his election in 1519, second in importance to Fugger but quite massive, King Charles V, unable to reimburse, provided the Welsers with privileges within the African slave trade and conquests of the Americas.

The Welser Family was offered the opportunity to participate in the conquest of the Americas in the early to mid-1500s. As fixed in the Contract of Madrid (1528), also known as the “Welser Contracts”, the merchants were guaranteed the privilege to carry out so-called “entradas” (expeditions) to conquer and exploit large parts of the territories that now belong to Venezuela and Colombia. The Welsers nourished fantasies about fabulous riches fueled by the discovery of golden treasures and are said to have created the myth of “El Dorado” (the city of gold).

Account of a German colonial expedition.

The Welsers started their operations by opening an office on the Portuguese island of Madeira and acquiring a sugar plantation on the Canary Islands. Then they expanded to San Domingo, today’s Haiti. The Welser’s hold of the slave trade in the Caribbean began in 1523, five years before the Contract of Madrid, as they had begun their own sugar production on the Island.

Included in the Contract of Madrid, the right to exploit a huge part of the territory of today’s Venezuela (Klein Venedig, Little Venice), a country they themselves called “Welserland”. They also obtained the right to ship 4,000 African slaves to work in the sugar plantations. While Spain would grant capital, horses and arms to Spanish conquistadors, the Welser would only lend them the money that allowed them to buy, exclusively from them, the means of running their operations.

Welsers exploring Venezuela.

Poor German miners went to Venezuela and got rapidly into huge debt, a situation which exacerbated their rapacity and worsened the way they treated the slaves. From 1528 to 1556, seven expeditions led to the plunder and destruction of local civilizations. Things became so ugly that in 1546, Spain revoked the contract, also because they knew the Welsers also served Lutheran clients in Germany.

Bartholomeus Welser’s son, Bartholomeus VI Welser, together with Philipp von Hutten were arrested and beheaded in El Tocuyo by local Spanish Governor Juan de Carvajal in 1546. Some years later, the abdication of Charles V in 1556 meant the definitive end of the Welser’s attempt to re-assert their concession by legal means.

19. Buy me Peru and Chile, baby

Unlike the Welser family, Jacob Fugger’s participation in overseas trade was cautious and conservative, and the only other operation of this kind he invested in, was a failed 1525 trade expedition to the Maluku Islands led by the Spaniard Garcia de Loaisa (1490-1526).

For Spain, the idea was to gain access to Indonesia via America, escaping Portuguese control over the spice road. Jacob the Rich died in December of that year and his nephew Anton Fugger (1493-1560) took over the strategic management of the firm.

And the did go on. The Fugger’s relations with the Spanish Crown reached a climax in 1530 with the loan of 1.5 million ducats from the Fugger for the election of Ferdinand as “Roman King”. It was in this context that the Fugger agent Veit Hörl obtained as collateral from Spain the right to conquer and colonize the western coastal region of South America, from Chincha to the Straits of Magellan. This region included present-day southern Peru and all of Chile. Things however got foggy and for unknown reasons, Charles V, who in principle agreed with the deal failed to ratify the agreement. Considering that the Welser’s Venezuela project degenerated into a mere slave-raiding and booty enterprise and ended in substantial losses, Anton Fugger, who thought financial returns were too low, abandoned the undertaking.

20. By me a couple of slaves, baby

Manillas.

Copper from the Fugger mines was used for cannons on ships but also ended up in the production of horse-shoe shaped “manillas”. Manillas, derived from the Latin for hand or bracelet, were a means of exchange used by Britain, Portugal, Spain, the Netherlands, France and Denmark to trade with west Africa in gold and ivory, as well as enslaved people. The metals preferred were originally copper, then brass at about the end of the XVth century and finally bronze in about 1630.

In 1505, in Nigeria, a slave could be bought for 8–10 manillas, and an elephant’s ivory tooth for one copper manila. Impressive figures are available: between 1504 and 1507, Portuguese traders imported 287,813 manillas from Portugal into Guinea, Africa, via the trading station of São Jorge da Mina. The Portuguese trade increased over the following decades, with 150,000 manillas a year being exported to the like of their trading fort at Elmina, on the Gold Coast. An order for 1.4 million manillas was placed, in 1548, with a German merchant of the Fugger family, to support the trade.

In clear: without the copper of the Fugger’s, the slave-trade would not never have become what it became.

Benin bronze bas relief.

In 2023, a group of scientists discovered that some of the Benin bronzes, now reclaimed by African nations, were made with metal mined thousands of miles away… in the German Rhineland. The Edo people in the Kingdom of Benin, created their extraordinary sculptures with melted down brass manilla bracelets, Fugger’s grim currency of the transatlantic slave trade between the XVIth and XIXth centuries…

Endgame

Anton Fugger.

Anton Fugger tried to maintain the position of a house that, however, continued to weaken. Sovereigns were not as solvent as had been hoped. Charles V had serious financial worries and the looming bankruptcy was one of the causes he stepped down leaving the rule of the empire to his son, King Philip II of Spain. Despite all the gold and silver arriving, the Empire went bankrupt. On three occasions (1557, 1575, 1598), Philip II was unable to pay his debts, as were his successors, Philip III and Philip IV, in 1607, 1627 and 1647.

But the political grip of the Fugger over Spanish finances was so strong, writes Jeannette Graulau, that “when Philip II declared a suspension of payment in 1557, the bankruptcy did not include the accounts of the Fugger family. The Fugger offered Philip II a 50 % reduction in the interest of the loans if the firm was omitted from the bankruptcy. Despite intense lobbying by his powerful secretary, Francisco de Eraso, and Spanish bankers who were rivals of the Fugger, Philip did not include the Fugger in the bankruptcy.”

In 1563, the Fugger’s’ claims on the Spanish Crown amounted to 4.445 million florins, far more than their assets in Antwerp (783,000 florins), Augsburg (164,000 florins), Nuremberg and Vienna (28,600 florins), while their total assets amounted to 5.661 million florins.

But in the end, having tied their fate too closely to that of the Spanish sovereigns, the Fugger banking Empire collapsed with the collapse of the Spanish Hapsburg Empire. The Welser went belly up in 1614.

French professor Pierre Bezbakh, writing in Le Monde in Sept. 2021 noted:

Today, a handful of international banks called “Prime Brokers” are allowed to buy and resell on the secondary market French State Bonds, issued at regular dates by the French Treasury Agency to refinance French public debt (€3,150 billion) and most importantly to refinance debt repayments (€41 billion in 2023).

The names of today’s Fugger are: HSBC, BNP Paribas, Crédit Agricole, J.P. Morgan, Société Générale, Citigroup, Deutsche Bank, Barclays, Bank of America Securities and Natixis.

Conclusion

Beyond the story of the Fugger and Welser dynasties who, after colonizing Europeans, extended their colonial crimes to America, there’s something deeper to understand.

Today, it is said that the world financial system is “hopelessly” bankrupt. Technically, that is true, but politically it is successfully kept on the border of total collapse in order to keep the entire world dependent on a stateless financier predator class. A bankrupt system, paradoxically, despairs us, but gives them hope to remain in charge and maintain their privileges. Only bankers can save the world from bankruptcy!

Historically, we, as one humanity, have created “Nation States” duly equipped with government controlled “National Banks,” to protect us from such systemic financial blackmail. National Banks, if correctly operated, can generate productive credit generation for our long-term interest in developing our physical and human economy rather than the financial bubbles of the financial blackmailers. Unfortunately, such a positive system has rarely existed and when it existed it was shot down by the money-traders Roosevelt wanted to chase from the temple of the Republic.

As we have demonstrated, the severe mental dissociation called “monetarism” is the essence of (financial) fascism. Criminal financial and banking syndicates “print” and “create” money. If that money is not “domesticated” and used as an instrument for increasing the creative powers of mankind and nature, everything cannot, but go wrong.

Willing to “convert”, at all cost, including by the destruction of mankind and his creative powers, a nominal “value” that only exists as an agreement among men, into a form of “real” physical wealth, was the very essence of the Nazi war machine.

In order to save the outstanding debts of the UK and France to the US weapon industry owned by JP Morgan and consorts, Germany had to be forced to pay. When it turned out that was impossible, Anglo-French-American banking interests set up the “Bank for International Settlements”.

The BIS, under London’s and Wall Street’s direct supervision, allowed Hitler to obtain the Swiss currency he required to go shopping worldwide for his war machine, a war machine considered potentially useful as long as it was set to march East, towards Moscow. As a collateral for getting cash from the BIS, the German central bank would deposit as collateral tons of gold, stolen from countries it invaded (Austria, Netherlands, Belgium, Luxembourg, Czechoslovakia, Poland, Albania, etc.). The dental gold of the Jews, the communists, the homosexuals and the Gypsies being exterminated in the concentration camps, was deposited on a secret account of the Reichsbank to finance the SS.

The Bank of England’s and Hitler’s finance minister Hjalmar Schacht, who escaped the gallows of the Nuremberg trials thanks to his international protections, was undoubtedly the best pupil ever of Jacob Fugger the Rich, not the father of German or “modern” banking, but the father of financial fascism, inherited from Rome, Venice and Genoa. Never again.

Summary biography

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