00:21:06 · Ty Morse, Ryan Petersen
[00:21:06] S0: So there was a lack of trust in currency? [00:21:07] S1: It was a lack of... Well, they had to use hard metal. It wasn't fiat. It was traded with silver and bullion, and it became a huge drain, especially China. Like the Chinese produced lots of things that the British wanted, tea, silk, porcelain, probably some other stuff. But those are the big ones. And the British didn't have anything at scale that they wanted. They had mechanical clocks that people thought were interesting and stuff, but basically the Chinese were pretty self sufficient, and these guys would show up with British textiles that weren't very quality compared to the local stuff, and there was nothing to trade. So what they did want was silver. So it was really draining the silver reserves of of the Europeans doing this trade. It had... And where you get silver from, of course, mostly from The Americas, from Peru, from Potosi, the the mine in, in Peru, in Bolivia, excuse me. And actually about 25% of all the silver mined in The Americas went across the Pacific, not across the Atlantic, which sailed via this Manila galleon, sailed to Manila. And Manila... The Philippines became a trading hub because the the Chinese were banned from trade, externally. And so they had to sneak out to The Philippines and do their trade with the Europeans there. [00:22:31] S0: Why were they banned from trade? [00:22:33] S1: The Ming dynasty had banned trade. That's considered a huge tactical blunder. Stopped allowing overseas trade. [00:22:41] S0: What was the logic behind that decision?
00:22:43 · Ryan Petersen
[00:22:43] S1: I think it was mostly government run operation up until then. Naval going, and it was really draining their funds. They weren't seeing a return from it. They weren't looking at overseas commerce as a commercial adventure. It was largely diplomatic. It was power projection. It was symbolic. They would build these treasure fleets and go sail the world to show how great China was and get people to kind of bend the knee and do some diplomacy. But it wasn't profitable at all. And there was a new emperor and he said, enough of this. We got our own problems here domestically. We're going to stop that, stop funding it. And they actually banned overseas trade during the Ming dynasty about sixty years or something, fifty years before Vasco da Gama rounded the Cape. I mean, it's a great alternative history of what would have happened if the Chinese had been there in force with their their much larger, more powerful ships than what the Europeans had. So anyways, the Chinese were banned, they would have to come down to Manila to get to get trade... To get, to do trade. And so the Spanish sent this galleon every year. Actually, it would come by here in California, sail up the coast and then cross over. I forget where they would head out to sea, but, but in California somewhere and head out to see, trade the silver in Manila, but it was... It's not good for the... You don't want to just give up all your silver. And so eventually the British figured out that the Chinese did want opium, which came from India, from Afghanistan, and that became the main business of the British East India Company, that most of the profits... I don't think the other stuff they were doing was that profitable.
00:24:19 · Ty Morse, Ryan Petersen
[00:24:19] S0: Was back home Britain aware of the fact that most of the profits from this company were coming from opium trade? [00:24:25] S1: Yeah, I think so. It radically changed everything because now you don't even really need to evolve Britain. You would just go from India to China, make a bunch of money. And they... I guess they would they would take the Chinese goods of tea and stuff and ship that back. And, of course, you know, the tea party... The original tea party, the Boston Tea Party was British East India Company. Yeah. The same company. Right? Trading this tea from, from China, but it had been opium exchange for tea shipped to Boston, here in The United States or then the American colonies. I guess we've come full circle back to Pablo Escobar trading. Now we're trading opium, but as a government into China, Chinese are still very bitter about this, rightfully so. Devastated, I think twenty to thirty percent of their population was addicted to opium, which if you go to Downtown San Francisco, fentanyl is an opiate much stronger. [00:25:21] S0: That's way less than thirty percent. [00:25:22] S1: Yeah, it's a small percent and it's devastating. I think it was having a similar effect on their people and they tried to ban it. And the British sent gunboats in and soldiers and burned down the emperor's palace in Beijing and conquered the country to enable the trade to continue. So I think still a lot of historical, anger over that.
00:25:22 · Ryan Petersen, Ty Morse
[00:25:22] S1: Yeah, it's a small percent and it's devastating. I think it was having a similar effect on their people and they tried to ban it. And the British sent gunboats in and soldiers and burned down the emperor's palace in Beijing and conquered the country to enable the trade to continue. So I think still a lot of historical, anger over that. [00:25:44] S0: In a different timeline where you didn't have the opium trade in China, do you think that the Chinese, like, evolution of power changes and and it's kind of different today? Like, we just set back or you know, the British set back China by, you know, fifty years or something
00:25:57 · Ryan Petersen
[00:25:57] S1: Yeah, like maybe thirty or fifty years or something like that. Hard to... It's really hard to say. I think the Chinese... The Qing dynasty was really failing to modernize, but it was possible to happen. I think in some of these cases, it's a question of leadership and how do you get a strong enough leader to... That's probably the more interesting counterfactual is what if there had been a great emperor born who could have reformed and modernized the way the Japanese did. The Japanese had similar problems. They tried to keep the foreigners out successfully for a long time. The Americans showed up with gunboats, forced to open their markets. They had a huge wake up call and said, we need to modernize. And they sent some of their best and brightest people to the West to learn about industrialization, to learn about the technologies, the structures, the military structures, the economic structures. And it's called the Meiji Reformation, Meiji something, basically the Meiji Dynasty. They put in these reforms that led to Japan becoming a superpower. Ultimately, it wasn't strong enough to do what their ambition was, which was to take over the whole Pacific. The Americans didn't let that happen, but they became a superpower in almost no time. And so, yeah, could that have happened earlier? I mean, I think that's a little bit of what's happened since Deng Xiaoping and more modern China's said, hey. We need to learn from the West and adopt these things and go. But it took, right, there's a hundred years or more in in there, hundred and fifty years from the Opium War to... Till Deng Xiaoping. It could've... Yeah. It certainly could've happened earlier, but probably more about leadership than it was if opium hadn't been discovered. I don't know that opium itself held them back. I mean, the industrial revolution was very real. And if you don't adopt the industrial... The technologies of the industrial revolution, you're probably gonna fail whether or not you get addicted to to opium.
00:27:44 · Ty Morse
[00:27:44] S0: Before we started, you mentioned the Forbes family, not the Forbes family with a magazine, but a different Forbes family. Go into that.