Opium under licence: how the Council taxed, counted and finally closed the Settlement's divans and shops, 1880–1934

The short answer. For thirty years opium was one of the Municipal Council’s steadiest sources of revenue: it licensed the divans where the drug was smoked and the shops where it was sold, counted them every month, and watched the fees climb from 24,655 taels in 1885 to 68,704 in 1905. When the Qing court moved against the drug in 1906 the ratepayers voted, on 20 March 1908, to close a quarter of the 1,437 licensed smoking houses by lot, and the last divan closed on 31 December 1909. The shops lasted longer and paid more, 180,666 taels in 1916, until the last licence lapsed on 31 March 1917. After that the Council had no opium revenue and a great deal of opium: 1,459 prosecutions in 1921, 2,725 in 1928, 7,996 arrests in 1934, and three successive police commissioners asking to be allowed to license it again. This is the drug as the Council’s reports and gazettes recorded it.

1880–1893: a licence for every lamp

The Council’s interest was fiscal before it was moral. In 1879 “the chief opium-houses left the Settlement” during a quarrel over wharfage dues, and in 1880, when the ratepayers sanctioned an additional tax on opium shops, the shopkeepers petitioned and “the Council were unable to comply with their request”. The fees then rose with the trade. In 1881 “owing to the great increase in the number of Opium Shops in the settlement, the fees collected during the year have exceeded the estimates by fully Ts. 2,500”; in 1885 “the monthly average having been 750 against 730 last year” the fees were 24,655 taels, against 28,000 in 1883; in 1887 “the average number licensed each month has been about 900, against 840 last year, and the fees amount to Tls. 27,600”; in 1888 about 960 and 29,300 taels, with the note that “a great many new places have been opened during the year, but most of them with only a very small number of lamps”, for the licence was graded by lamps; in 1889 about 1,060 and 31,186 taels; in 1890 about 1,135 and 32,100; and in 1893, when “several additional opium-shops have been opened in Hongkew”, 1,200 a month and 34,085 taels. The figure had risen by a third in eight years, and every tael of it was a lamp lit in a room the police had inspected.

1904–1905: houses and shops

The words changed in 1904. The Council now counted “houses” “(in which opium is smoked)”, 18,090 monthly licences in the year, separately from “shops” “(licensed for the sale of the drug, not to be consumed on the premises)”, 1,144, an average of 1,603 licences a month against 1,567 in 1903, producing 61,203 taels. Pott, writing in 1928, took this as the moment “a clear distinction was drawn between an opium shop and an opium house”. In 1905 “it was decided to license the wholesale dealers in crude or boiled opium” as well, and the total rose by 7,501 taels to 68,704. The Council’s own ten-year tables, printed later, give the house fees as 63,395 taels in 1905, 65,268 in 1906 and 61,094 in 1907, and the shop fees as 5,309, 5,434 and 4,290. The shops were a tenth of the business; the smoking houses were the business, more than a tenth of all the licence revenue the Settlement collected.

1906–1908: the edict, the missionaries and the lots

The court moved first. “On November 21st, 1906,” in Pott’s dating, “an edict was issued ordering that the cultivation of the poppy should be gradually decreased, and finally cease altogether in ten years”, and in December Britain agreed to cut the Indian export by a tenth a year from 1908. The chairman wrote to the daotai on 12 January 1907 “of the sincere sympathy of the Council with the movement toward the suppression of the use of opium”, and the dens in the walled city closed that year. What the Council would actually do was argued through February and March 1908. Its budget minute proposed “that the present partial measures of diminution be continued”, by “reduction of numbers by lot or curtailment of the lamps in each house”, because so long as opium was imported and grown its consumption “must remain subject to Police supervision under licence, since otherwise the coolie-hongs and native lodging houses will, without doubt, become foci for the dissolute and criminal classes.” The Shanghai Missionary Association petitioned on 25 February “for the withdrawal of all licences for opium smoking in this Settlement during the forthcoming financial year”, and pressed, in a second letter, for the whole process to finish “within a period of two years”. The annual meeting of ratepayers on 20 March 1908 took the middle course: “that the number of licensed opium houses be reduced by one-quarter from July 1, 1908”.

The reduction was done by lottery, in public, in a market on Nanjing Road. “Application of the process tabulated above divided the 1,437 existing licensed houses into 18 lists, and selection was by lot in each list,” on 18 April and 3 October 1908, “in the presence of three representative members of the native community”. “The first drawing resulted in the closing of 358 houses, representing a monthly licence fee of $1,640, while the second drawing affected 369 houses, the monthly licence fees in respect to which amounted to $1,692.50”; the police reported the July closing “carried to completion without difficulty or disturbance”. Of 727 houses closed, the Council followed the people: 94 proprietors turned to off-premises sale, 218 were brothel keepers who went on without opium, 76 were unemployed; of the servants, 203 went home and 217 found other work. The monthly average of licensed houses fell from 1,563 in 1907 to 1,209, the fees from 61,094 taels to 48,454, and the Council, which had resisted in February, wrote in its report that “there is no obstacle to proceeding in the same gradual manner to close all houses in the Settlement” and that “the incoming Council will, without doubt, conclude the work”. The reason it gave was not the missionaries but “the undesirability of giving cause for a contention that local efforts on the part of the Chinese Government have been handicapped by any lack of Municipal co-operation”.

1909: the Commission and the last divan

The world came to Shanghai that February. “On February 1 the International Opium Commission held the first of its fourteen sessions, and the last on February 26,” the Council recorded; it “was presided over by an American, Bishop Charles Henry Brent”, in Pott’s account, and met “at the invitation of the American Government”. Its conclusions “were embodied in nine resolutions”, the seventh of which “strongly urges all Governments possessing Concessions or Settlements in China, which have not yet taken effective action towards the closing of opium divans in the said Concessions and Settlements, to take steps to that end.” The Council could reply that it had: its report, written while the Commission sat, said “one-half of the opium shops in the Settlement have already been closed”, and in January its police had found “seven establishments where opium might be bought and smoked surreptitiously” in the native city, where the dens were supposed to have closed in 1907, and passed the addresses to the senior consul.

The rest went in 1909. “A further drawing was held on April 17, 1909,” for closure on 30 June; “the remaining licences were withdrawn on December 31, so that at the present time there are no licensed opium houses within Settlement limits”. House fees for the last year were 40,420 taels. The chairman’s introduction said what the Council expected: “the consumption of the drug privately and in lodging-houses has increased. This was to be expected and the risk had to be run.” The report’s opium chapter put it more flatly: “It was never anticipated that the abolition of divans could be entirely effective, or would form a death-blow to consumption of the drug.” Of the last licensees, the Gazette reported, 88 “converted their places into establishments where opium is sold for consumption off the premises”, 35 “went into other business elsewhere”, and 108 “were brothel keepers and they are still carrying on business in the same houses without opium”. The shops absorbed the trade: their monthly average rose from 112 to 206 and, with the fee raised from 1 April, their fees from 5,770 taels to 21,955.

1910–1917: the shops pay more than the divans ever did

The Council now sold the drug through fewer doors at a higher price. On 28 November 1910 the chairman, David Landale, told the senior consul that in three years, “in addition to closing all opium divans, the licence fee for opium shops has been increased from $10 as maximum and $1.50 as minimum, to Tls. 40 as maximum and Tls. 10 as minimum; at which latter rates there are at present 310 licensed shops”, and that the Council was “prepared to apply to opium shops the same procedure as was adopted in respect to divans; namely, annual reduction of the number of licences by a proportion to be agreed upon, and simultaneous increase in the licence fee to an almost prohibitive height”. Nobody asked it to. The shops averaged 317 a month in 1910, 329 in 1911, 374 in 1912 and 465 in 1913; the fees were 55,128 taels, 62,631, 67,664 and 86,386, more than the divans had ever paid. Licence income as a whole was 535,097 taels in 1913, “mainly due to the increase in the number of opium shops”, and 582,058 in 1914, an excess over estimate “chiefly attributable to the high fees which have been charged during the year on Opium Shops”.

London noticed. In July 1914 the British minister passed on a request to reduce the licences, “which, His Majesty’s Secretary of State regrets to learn from a question in the House of Commons, have greatly increased in number”. The chairman, E. C. Pearce, replied on 25 July with the Council’s settled doctrine: “as long as China and the Powers allow opium to be brought into the Settlement its retail sale must be supervised under licence. To reduce the number of licences issued would have no effect upon the amount sold nor upon the amount consumed.” What moved the Council was arithmetic. The stocks in Shanghai “at present amount to 9,300 chests, and it is anticipated that they will last for about 2½ years”, so in September 1914 it proposed to treat the shops as it had the divans, and on 7 December gave “an assurance … that the licences will cease at latest by the end of 1917, but possibly earlier.” The ratepayers endorsed it in March 1915. “The first drawing took place at the Town Hall on June 30; three months’ notice to close was given; one-quarter of the total number of licences were accordingly withdrawn on September 30 and total extinction of the sale of opium in the Settlement will ensue on March 31, 1917.” By then “the opium shops have increased to 609 or nearly double the number in existence in 1910”, and for 1916 the fee for guild shops was quadrupled “from Tls. 100 to Tls. 400” and the ordinary maximum from 50 to 200. The last full year, 1916, brought 180,666 taels.

“1917 marks an important year in the history of opium, the traffic in which had flourished in the Settlement during the past fifty years. On March 31, the remainder of the Opium Shop Licences were withdrawn”. The March quarter’s receipts were 45,390 taels, “Tls. 4,610 below the estimate” because “several shops were closed before March 31 on account of the proprietors being prosecuted for dealing in illicit opium”. That month the Council denied “the report that the Opium Combine is making or has made arrangements with the French Council by which the opium shops in the French Settlement will be kept open indefinitely”; the French Council would close its shops on the same day. The combine’s stock did not vanish. Pott records that “the Chinese Government purchased from the opium combine all the stocks in Shanghai, consisting of 1,200 cases of prepared opium, valued at Tls. 25,000,000, and committed them to the flames in the specially erected furnaces in Pootung”, and that on 12 October 1921 “more than one and a quarter million dollars worth of opium and other drugs went up in flames” there.

1919–1934: prohibition as the police saw it

What replaced the licence was the raid. Opium cases “numbered 635 in 1919, 1,019 in 1920 and 1,459 in 1921”. The commissioner’s report for 1921 is the first of a series: “the illicit traffic in opium in Shanghai was never more flourishing than at present”, with “wealthy individuals and strong financial groups standing at the back of the smugglers”, and “there seems to be only one remedy for the general demoralisation to which the prohibition of opium has given rise, and that is to permit its sale under licence.” That year’s haul was 24 cases “weighing almost one ton and three quarters and valued at Tls. 384,000”, seized on 30 September, and 3,762 lb at 349 Tiendong Road on 1 August. The Council’s one experiment, in June 1921, was to license “qualified persons to sell in medicinal quantities” at 5 to 50 taels a quarter; the chairman told the ratepayers in 1923 that it “was not, I regret, a success”. Prosecutions rose to 1,846 in 1922, the police found teapots “with false bottoms in which were hidden specially constructed lamps, pipes” in 1923, and in 1925 the special squad made 131 raids, seized 2,960 lb and $38,763 in fines, the largest haul at 51 Canton Road. “The smoking of opium appears to be nearly as prevalent as ever, both privately and in secret dens,” the Council wrote, and again that “the only satisfactory method … is for the Council to control the sale of opium under licence.”

Across the boundary the Chinese authorities tried the other answer. The Gazette noted in 1927 that “the Shanghai Opium Suppression Bureau was formally opened on August 21 in the Coal Merchants’ Guild, Chinese City”, under a policy of licensed sale “in vogue in every province under the control of the Nanking Government”, which the Gazette observed was “contrary to the existing Criminal Code”. In 1928 the Settlement’s police “charged no less than 2,725 persons”, of whom 2,023 were fined and 493 imprisoned and fined; the preventive squad’s 147 raids took 580 pipes and 256 lb, and “raw opium in any quantity can still be obtained from hongs situated just beyond the Settlement boundary”. By 1932 a Narcotic Section existed: it and the stations “dealt with 1,688 cases during the year as against 1,385 cases in 1931 and arrested 5,234 persons, of whom 4,432 were convicted”, 621 for selling or manufacturing and 4,613 for dens and smoking, with fines of $196,606 and seizures that now included 1,779 oz of morphine and 216 oz of heroin. In 1934 there were 2,328 cases and 7,996 arrests, fines of $238,640, and 3,568 admissions to the gaol hospital for the opium habit against 2,965 the year before. In 1893 the Council had licensed 1,200 shops and prosecuted almost no one; in 1934 it licensed none and arrested 8,000.

What the sources disagree on

Pott dates the imperial edict to 21 November 1906; the Council’s reports do not date it, and the court’s first anti-opium edict is usually given as September 1906, so Pott may be dating the regulations that followed. The 1908 report says 358 houses closed in July in one place and, in an OCR reading, 858 in another; the Council’s own total of 727 for the year supports 358. The 1909 drawing is printed as “865 more houses”, which cannot be right if 710 remained; the figure is treated as corrupt and not used. The Council’s reports call the 1909 body a Commission, a Conference and a Congress; Pott says Conference. The last divans closed on 31 December 1909 by every narrative source, but the Council’s later licence tables carry the footnote “Opium Houses were abolished in 1910”. Pott compresses the 1908–09 closings into “semi-annually one-fourth”. The 1925 seizure at 51 Canton Road is 458 lb in the Council’s report and 385 lb in the Gazette. The 1921 prosecutions are 1,459 in the 1921 report and 1,417 in the 1922 report’s text. Pott gives no year for the burning of the combine’s 1,200 cases; the chapter places it after the war. Where the Commission met is not in any Council source read here.

What to look for

Nothing of the licensed trade was built to last. The market on Nanjing Road where the lots were drawn in 1908 and the Town Hall where the shops were drawn in 1915 are both gone under the department stores between Zhejiang Road and Xizang Road. 51 Canton Road is a Guangdong Road address a block from the Bund, and 349 Tiendong Road is on Tiantong Road behind the North Suzhou Road frontage; the buildings are later. The furnaces at Pudong where the combine’s stock was burned have no marked site. What survives is paper: the licence tables in the Council’s reports, which record, year by year, exactly how much the Settlement earned from the drug before it decided it should not.