How did the British East India Company become involved in the opium trade?

The British East India Company became involved in the opium trade as a strategic solution to a chronic trade imbalance with China. In the 18th and 19th centuries, there was immense European demand for Chinese luxury goods like tea, silk, and porcelain, but little demand in China for Western products, forcing Britain to pay for these goods with gold and silver.1

To address this, the company established a monopoly on opium cultivation in the Indian province of Bengal, where it could be produced cheaply and abundantly. By 1779, the company began auctioning the drug to private, licensed "country traders" in India. These traders smuggled the opium into China, where it was sold to local distributors.12

The company did not transport the opium itself due to Chinese prohibitions. Instead, it collected the silver proceeds from these sales in China, which were then used to purchase Chinese tea for export to Europe. This "triangular trade" allowed the company to repatriate its Indian revenues and effectively finance its lucrative tea trade, despite the severe social and economic disruption caused by widespread addiction in China.12