Profit From Addiction: A Tried Strategy
Though it may seem like a relatively new strategy, profiting from opium drug addiction has been used throughout the last several centuries, and this has allowed several families to accumulate a large amount of wealth because it is so effective. Wherever this happens, the countries addicted lose social moral because of the damaging qualities of opium. Many people, especially younger Americans, would equate this business philosophy to the destructive side of American capitalism, but I would argue this business strategy seems to be a destructive side of human nature. French novelist Honoré de Balzac said it best, “Behind every great fortune, lurks a crime.” This article will examine the first, modernized, mass drug network and illustrate how several families gathered a vast fortune from this business strategy.
The Creation of the First Drug Network
Typically, when someone thinks of a drug network, the first thing that comes to mind may be a Mexican cartel or the Italian mafia, but the first great example of an industrialized drug network can be traced back to the time of the East India Company, which was incorporated in 1601.
The first sailing included the four ships of the East India Company, then known as ‘Company of Merchants of London Trading with the East Indies,’ commenced on February 13, 1601, and was destined for the pepper-producing islands of Sumatra and Java, islands in Western Indonesia.
The East India Company was established in 1600 by a royal charter, which granted the company a monopoly overall all English trade with the East. This restriction was typical of the time since the business was perilous with high chances of shipwrecks, pirates, and other dangers. Therefore, investors needed to ensure that they could safeguard their profits as much as possible.
During this first voyage, the ships sailed around the coast of South Africa and across the Indian Ocean to Sumatra, and two boats stopped in the port of Aceh. The remaining two ships arrived at the bustling port of Bantam on December 1602.
During the initial trade negotiations with the Sumatrans, the English ran into a problem: the Sumatrans were not interested in trading their precious spices for woolen cloth and different kinds of iron because, given the climate in Sumatra, wool seemed useless to the Sumatrans.
The man in command, James Lancaster, had to act quickly. Determined to make a trade, Lancaster captured a large, Portuguese ship and stole its precious cargo of gold, silver, and Indian textiles. These goods allowed Lancaster to trade for pepper at Aceh, and he noticed that pepper was cheaper in Bantam, the island of Java, and Lancaster traded for more pepper there.
After trading enough to fill all four ships with pepper, the sailors arrived back in London in 1603. Since the sailors lived in cramped conditions, many died from sickness. Over the nine years, eleven more voyages left the Thames River in England for the factory that James Lancaster has established in Bantam. This was the start of the East India Company.
Trading in Bantam
Though the East India Company had a monopoly within the English world regarding the spice trade, it did have one notable competitor: the Dutch United East India Company.
The United East India Company arrived in Bantam six years before the English in 1596. There were consistent disputes between these two companies; the United East India Company continually prevented the English from trading directly with the Spice Islands of the Bandas and the Moluccas in eastern Indonesia, which was a source of valuable spices including cloves, nutmegs, and mace.
Wars were fought between these two companies for dominance of the area throughout the 1600s; however, around the end of that century, the Dutch had established a focus on Indonesia, but the English saw greener possibilities elsewhere: Asia.
The market of Bantam was exceptionally cosmopolitan and thriving. It was in that market that the English met Arab, Turkish, Iranian, Gujarati, Tamil, Bengali, Malay, Javanese, and Chinese merchants who were selling products from their own countries. Vendors at the market traded and sold a fabulous range of exotic goods from silks, porcelain, and carpets to spices, drugs, and gourmet foods. Even still, the Asian traders were not interested in the English’s woolen cloth and silver, so the English knew they had to change their bartering strategy to make them more appealing to these merchants. These merchants seemed to be particularly interested in bartering with other Asian goods and Indian Textiles.
Bantam became the central trading hub for the East India Company, and many of the company’s representatives and employees lived, worked, and traded in this city.
From this hub, the English were able to expand into other parts of Asia.
Though the English had been trading with woolen cloth at the Bantam market, they quickly became aware their trading would be much more effective if they were bartering with other Asian goods, especially Indian textiles. So, the English needed to dispose of their English cloths and find other Asian products to exchange; India, with its luxurious textiles, seemed to be an appropriate answer.
At that time, the Mughal Empire covered northern and central India and was perhaps the world’s most civilized center of power. Its centers of Agra, Delhi, and Lahore were filled with expensive items which would certainly suit the English’s trading needs. But there was one issue: the Portuguese had already established trading seniority of that area because they had been trading directly with India for over a century before the first English ship even arrived in Surat, India.
The East India Company was not welcome, and in 1611, the company asked King James to send an ambassador, Sir Thomas Roe, to visit Jahangir, the Mughal Emperor, but this was not the first Englishman to meet the Emperor. William Hawkins, the commander of Hector, the first East India Company ship to anchor at Surat, India in 1608. Though he impressed Jahangir with his grasp of Turkish and ability to drink lots of wine, he failed to establish an agreement for the English.
However, the ambassador, Sir Thomas Roe, made an agreement with the empire in 1615, which allowed the East India Company to establish a base in Surat, India. Consequently, the company was able to send Indian textiles to the market in Bantam. Finally, it seemed the English could trade with Indian goods which were wanted by the merchants.
The goods the English accessed were marvelous; the highly skilled dyers and weavers in India produced cloths with beautiful, color-fast designs, and with the East India Company, these cloths were quickly distributed throughout Asia. English demand for these cloths and textiles grew as well, and the Indian design style even influenced the design style of textiles in Britain. By 1750, Indian silks, cottons, and calicoes made up 60% of the company’s sales. However, also in 1750, things changed quickly in the Mughal Empire.
In 1750, the Mughal Empire was on the state of collapse, and regional states began to emerge in India, and the English company began to become involved in power and politics, even raising its own armies for war. After having fought off their French rival in the Battle of Plassey in Southern India in 1757, the English East India Company took control of Bengal. After this, the nawabs, Muslim rulers or princes, of Bengal were little more than puppets.
The final stab of humiliation came in 1765 when the Mughal Emperor Shah Alam granted the Diwani of Bengal, the right to collect the land revenue on behalf of the Company from the Mughal Emperor, to the East India Company.
From that point onward, the Diwani became the primary source of British revenue from India, and the English company was responsible for the civil, judicial, and revenue administration of India’s most prosperous province, with about a 20 million population. Thus, the East India Company became a ruling power in India and less of a trading company. While the company grew richer on the profits of its trade, land taxes shot up, and millions of Indians died in famines. Decades following, local industries were crippled by the actions of the company. The country of Britain did not seem to care.
Opium and The Expansion of Trade
Stepping back in time to 1690, we will break off from the above timeline and discuss the opium wars in the Qing Dynasty, present-day China. Before this time, Chinese products were highly demanded in Europe, so the East India Company was determined to establish a trade relationship with China to satisfy these demands of Chinese porcelain and silk. Unfortunately, though, for the Europeans, the Chinese did not have a lot of demand for European products because the Chinese believed everything China needed was produced in China, so there was an imbalance of trade.
China exported silk and porcelain to Britain, and for payment, the British paid with physical silver. However, British powers wanted a better solution for this trade imbalance because they believed there was too much silver was leaving Britain.
Meanwhile, the British’s trading company grew opium, the main constituent of heroin and morphine, in India and knew it would be addictive to the Chinese people and possibly solve the imbalance of trade power between Britain and China. So, the British sold the opium stating it could deaden pain, assist sleep, and reduce stress. Even though it was known in Europe at that time that opium smoking was a danger, the East India Company encouraged people to use the drug in China.
Foreign traders, primarily British, had been illegally exporting opium from India to China since the 18th century, but the trade boomed around 1820, resulting in widespread addiction and social and economic disruption. In spring 1839, the Qing Dynasty responded by confiscating and destroying more than 20,000 chests of opium, about 1,400 tons, that were stored in a warehouse in Canton by British merchants.
The tension between the two sides boiled in July 1839 when drunken, British merchants killed a Chinese villager. The British government did not want the merchants to be tried in the Chinese legal system because they were British citizens and refused to release the individuals to the Chinese government.
Hostile actions followed a year later when British warships destroyed a Chinese blockage at Pearl River, an estuary at Hong Kong. Additionally, the British government decided to send an expeditionary force to China, which arrived at Hong Kong in June, and the force sailed up the estuary to Canton.
After months of negotiations, the force attacked and occupied the city in May 1941, and there were several additional attacks in various cities, and because of the British’s superior military, they won the first opium war and were able to extract significant concessions from China.
The Chinese had to give the island of Hong Kong to the British indefinitely and open five ports for British trade: Shanghai, Ningbo, Fuzhou, Amoy, and Canton. The Chinese were also forced to pay for the opium they destroyed and give reparations to the British to pay for the cost of the war. The first opium war lasted from 1839 to 1842.
However, there was another war to follow: the Taiping Rebellion (1850-1864), a civil war started by a faction of Christianity in China who claimed their destiny was to overthrow the Qing Dynasty. This was one of the bloodiest civil wars any nation had seen in history with over 20 million people being killed. Historians believe the Qing’s concessions to the British and acceptance of opium in China was one of the major contributors to the Taiping Rebellion.
It was during this civil war that the second opium war occurred (1856-1860). This war was, again, started by the British because they wanted to extend their opium trading rights within China. The French even joined British in their military operations, claiming the murder of a French missionary in the interior of China in early 1856 as their justification. This series of wars destroyed the Qing Dynasty.
Americans' Connection to The Opium Wars
By this time, the United States of America was a well-established country, and several Americans saw the possibilities of the opium trade in China.
Samuel Russell arrived in Canton, China in 1819 and founded the Connecticut trading company Russell & Company. In 1830, the company was merged with Thomas Handasyd Perkins' J & T H Perkins of Boston, which were established in Canton, China in 1806 by John Perkins Cushing. Their illegal trade in Turkish opium through the island of Lintin in the Pearl River estuary was particularly lucrative.
In 1823, the 24-year-old Yankee Warren Delano sailed to Canton and worked with Russell & Company as the Chief of Operations, where after seven years, he made senior partner. Like Britain’s situation, China had plenty of goods to sell but declined to buy. Similar to the Britain-China trade situation, China has plenty to export, but nothing to import from America, but Warren Delano disagreed with Britain's strategy to get the Chinese addicted to opium.
In a letter to home, Delano said he could not pretend to justify the opium trade on moral grounds, “but as a merchant I insist it has been . . . fair, honorable and legitimate,” and Delano found Britain’s strategy no more objectionable than the importation of wines and spirits to the United States. At this point, it was 1939, right before the first opium war, and China set out to ban the opium trade and destroy the opium in the country.
However, Warren Delano’s objections did not seem to prevent him from becoming extraordinarily rich from this business. Delano ran offices in Canton and Hong Kong, and during the night, boats would row out into the Pearl River Delta to Delano’s floating warehouses, where the opium sales would happen.
The Delano family was not the only family who benefitted directly from the sale of opium. At that time, many of New England’s prominent families engaged in this trade.
The Cabot family of Boston donated large amounts of their opium money to Harvard, John Green was Princeton’s first large benefactor, and he engaged in the opium trade, and the Russell family donated their money to Yale’s most famous secret society: Skull and Bones.
Further, John Murray Forbes, a Bostonian who was an American railroad magnate, merchant, philanthropist, and abolitionist, became wealthy from his opium profits and financed the career of the transcendentalist Ralph Waldo Emerson and financed the Bell Telephone company.
Moreover, Thomas Perkins, another Bostonian merchant who became wealthy from the opium trade, founded America’s first commercial railroad and funded the Boston Athenaeum.
These are only a few of the families who are still wealthy to this day because of their great-grandparents and great-great-grandparents’ dealings with the illegal opium trade in China.
Most interestingly, however, is the name of Warren Delano's great-grandchild.
When Warren Delano returned to America in 1851, he was wealthy. Warren eventually gave his daughter, Sara, in marriage to a well-born neighbor, James Roosevelt, the father of Franklin Delano Roosevelt.
Warren Delano was very silent about his dealings with the opium trade, as was Russell & Company, and it is uncertain whether FDR knew how he obtained his old wealth or where it came from, but recent biographers of FDR rejected efforts by the Delano family to minimize Warren’s involvement in the opium trade. Thus, we had a President of the United States who benefitted directly from the first drug network, the illegal opium trade in China.
Opium Wars Summaried
I will quickly summarize and recap the opium wars:
They were called “opium wars” because of the British’s urge to flood China with India-grown opium as payment for Chinese products, but the Chinese refused to import the opium. As a consequence, England not only flooded China with opium, but British soldiers looted peaceful cities, burned public buildings, murdered innocent citizens, soiled sacred temple quarters, and used exquisite wood carvings for firewood. Soldiers also watched men, women, and children cut each other’s throats in despair. To add insult to injury, the East India Committee of the Colonial Society in London in 1843 said, “The lament of the fatherless, the anarchy, the starvation, and the misery of the homeless wanderers are the theme of a frightful triumph” .
Dr. Thomas Healy is a distinguished scholar, teacher, and Dean of the Foreign Service School of the old and noted Georgetown University in the Nation's Capital. Healy gave a straightforward view of the opium wars and the British’s involvement :
“The growing and sale of Indian opium was a British Government monopoly, which poured a golden stream of profits into the British Treasury. The British agents foresaw even greater profits if the defenceless [sic] Chinese were made to absorb more Indian opium.
“Dictating the Treaty of Nanking, 1842, closing the Opium War, Great Britain compelled the Chinese to pay an indemnity of $21,000,000, of which $6,000,000 was reimbursement for the destroyed opium - destroyed by the Chinese when the British insisted on forcing it into China against the latter's will.
“It was only through the debauchery of China in the Opium War that Britain directly, and the United States indirectly, obtained their 'sacred' treaty rights to establish themselves in the great port of Shanghai against the wishes of the Chinese people.”
One Family Above Them All
There was one British family who profited extraordinarily from the opium trade: the Sassoon family. The Sassoon family was the most influential Jewish-British family in England and had a close relationship with previous generations of the British Royal Family, noted by the royal family making several members of the Sassoon family baronets. However, the Sassoon deeply established their power during the opium wars.
David Sassoon started his business with a rug factory and banking establishment, but he recognized the opportunities in opium, so he strived for a monopoly on the China opium trade. David Sassoon had several sons, but Elias Sassoon was the first Sassoon to go to the China Seas in 1844, which was right after the first opium war which gave the British the right to flood China with as much opium as they wanted. It has been estimated that Elias sold opium to 400,000,000 customers, so he was highly successful.
Interestingly, another member of the Sassoon family, Sir Edward Sassoon, married Baron Gustave de Rothchild’s daughter and became a major in the Duke of Cambridge’s Hussars Yeomarry.
The Sassoon family has a very complicated family tree, so if you would like to see all the family members, please see reference .
Fast forwarding to the early 1900s, we will be primarily focusing on one Sassoon: Sir Victor Sassoon.
The name “David Sassoon” has been so prominent in Shanghai’s famous opium combine, that Shanghai’s leaders were familiar with the name; however, the man who seemed to know how to work the system was Sir Victor Sassoon.
No one knew exactly how much money Sir Victor carried in his pocket when he first landed in Shanghai in 1931; some believed he brought around eighty-five million, and others thought it was approximately three-hundred million. Regardless of how much money Sir Victor carried, he invested and bought everything that could be had for money, which was a lot in Shanghai.
Sir Victor took over the vast Nanking Road holdings of Silas Aaron Hardoon, accepted the chairmanship in his family’s old establishment, E. D. Sassoon & Co., Ltd., bankers, merchants, and industrialists, and controlled the Yangtze Finance Company and the International Investment Trust.
In January 1940, American Mercury called Sir Victor, “the white boss of Shanghai.” Primarily doing business in silver, Sir Victor branched out into real estate and was known as the wealthiest white man in the Far East.
It was even believed Sir Victor Sassoon influenced municipal elections in Shanghai. When the Japanese attempted to increase their membership on the Governing Council, an anonymous individual who possessed an enormous amount of real estate holdings in Shanghai prevented this attempt by breaking up their holdings into 1,200 parts, consequently increasing the British dominance of the council.
However, at that time, only Sir Victor Sassoon owned enough Shanghai real estate to accomplish this.
Though during most of the 1800s, the Sassoon family was able to keep most of their business operations in India, in 1929 political unrest caused Sir Victor Sassoon to shift base, as the family has done through the centuries, in Toledo, Venice, Salonika, Constantinople, Jerusalem, Safed, and Bagdad. Still owning vast amounts of fortune in the Far East, Sir Victor Sassoon moved to the United States where his business ventured simmered down.
While no one can overstate the value of wealth the Sassoon family acquired through the opium trade in China, the Sassoon family is still incredibly wealthy, but they do not seem they have any considerable effect in today’s life; however, there is one controversial family who has reminiscent characteristics of the Sassoon family: the Sacker family.
The Modern-Day Sassoon: Sackler
The Sackler family is often referred to as the new Sassoons because of their profit from opium – OxyContin.
It has been estimated 190,000 people have lost their lives from prescription painkiller overdoses , and most of them can be associated with excessive doses of OxyContin. OxyContin addiction can also be attributed to fueling the resurgence of low-quality heroin pouring over America’s borders, where those victims are too numerous to count.
More interestingly is the Sackler family is also a Jewish-British family whose members founded and owned the pharmaceutical company Purdue Pharma, the creator of the medication OxyContin, but unlike how the Sassoon family seemed to be immune from China’s legal system, this family is not immune to the legal system in America.
In 2007, Purdue Pharma was found guilty in federal court of manufacturing an intricate conspiracy to obfuscate the known addictive potential of OxyContin, along with other charges of wrongdoing. Though the CEO, CMO, and General Counsel were convicted, they never saw the inside of a jail cell and were able to escape justice by paying a 635 million dollar fine.
However, $635 million is a nothing-fine and is simply a cost of business because the sales of OxyContin passed the $35 billion mark from 1995 to the current year. In 2015, Forbes estimated the value of the Sackler family cartel to be near $14 billion .
The start of Purdue’s criminal profiteering starts back in the mid-1900s when all three Sackler brothers, Arthur, Mortimer, and Raymond, became doctors. While all three had entrepreneurial qualities, Arthur was an entrepreneurial genius.
Arthur Sackler had an idea: Arthur noticed the pharmaceutical industry at that time had no clue how to market itself, so he believed he could link the advertising qualities of Madison Avenue to the pharmaceutical industry. His techniques pioneered modern prescription drug advertising.
Under Arthur’s guidance, pharmaceutical companies began to hire esteemed doctors to vouch for the drugs and fund studies that showed how successful the drugs could be. After these studies were conducted, Arthur’s campaigns created flashy flyers for doctor’s offices with “facts” from these biased, Pharma-funded studies. These promotions were sometimes unorganized; in 1959, one national magazine found doctors endorsed a Sackler-backed antibiotic, but the problem was the medicine did not exist .
The Sackler enterprise started to make money in the 1960s. Because of the Sackler’s effective marketing techniques, the highly controlled tranquilizers Librium and Valium turned into common drugs. In 1973, Senator Edward Kennedy stated the millions of annual tranquilizer prescriptions has created “a nightmare of dependence and addiction” .
Nevertheless, the Sacker run Purdue Pharma had broader visions since the company’s revamped dreams revolved around exploiting the untapped potential of opioids, which were synthetic forms of opium that researchers started to develop in the early 1900s. (Is this starting to sound familiar?)
However, doctors were still fearful of the highly addictive qualities of opioids even though these drugs had powerful pain-killing qualities. Since the tranquilizer campaign was so effective, Arthur Sackler started another campaign to overturn these doctors’ reservations about opioids.
Purdue Pharma executed a marketing campaign for their OxyContin product, the company’s newest take on the opioid called oxycodone, which was a chemical cousin of heroin and twice as potent as morphine . Like many previous marketing strategies, Purdue funded numerous studies that testified to OxyContin’s “safety” and pushed doctors to prescribe the drug for a wide array of conditions.
Purdue’s sales force of a thousand reps traveled the country and reinforced the effectiveness of OxyContin, Purdue’s several thousand physicians testified to OxyContin’s effectiveness at medical conferences, and the company even offered doctors “all-expenses-paid trips to pain-management seminars in places like Boca Raton” . The overarching goal of their marketing campaign was to change the way doctors prescribed medication, and their campaign succeeded.
In 1995, the FDA approved Purdue’s OxyContin drug. Purdue experienced success almost overnight, and the FDA examiner who ran the approval process of OxyContin eventually came to work at Purdue. Problems associated with OxyContin started to arise because Purdue made the drug easy to abuse: the drug was formulated to slow-release over 12-hours, but patients could crush the pills to get a quick high. Purdue quickly blamed the abusers for the early addiction reports, but there were additional problems.
Purdue marketed the drug as a 12-hour pain-reliever, but the relief lasted much fewer hours, so patients who were trying to take it safely felt lead to take more of the drug to get its full, 12-hour effects. For years, Purdue would refuse to cooperate in explaining these situations, so notable political figures like New York City’s Rudy Giuliani got involved, but nothing seemed to happen.
Lawsuits began to target Purdue in the early 2000s, but Purdue settled them out-of-court before any incriminating documents, which were accessed during the pre-trial discovery, could be made public. Nevertheless, the death toll began to increase quickly, with the most notable location being Pike County, Kentucky, where nearly 30% of citizens had lost a family member to OxyContin addiction or knew someone who did.
Withal, the Sackler family continued to rake in a considerable profit. In 2015, the Sacklers earned an estimated $700 million from their Big Pharma interests. After gaining this fortune, the three, original Sackler brothers seemed to have a falling out, but some are looking for new opportunities to abuse the addictive effects of opioids.
One way the Sacklers are expanding their vision is by, through Purdue Pharma, subsidizing nonprofit groups that promote opioid use. On February 12, 2018, it was reported the nation’s five largest opioid makers gave 10 million dollars in the last five years to fourteen of these nonprofits and their doctors .
The second way the Sacklers are expanding their vision is by creating drugs to help with opioid addiction – the addiction they created. Richard Sackler invested in the patent for a new formulation of buprenorphine, a highly effective medication for treating opioid dependence . How nice it is that the family who started America’s opioid epidemic and made billions from it is now going to make billions more while trying to “fix” it.
Even with the Sacklers’ continued effort to create more addictive pharmaceuticals for profit, the Sackler family has still yet to provide or even attempt to research a non-addictive, natural solution. With their extensive wealth and social capital, they could research more into the therapeutic roles of purely natural substances and perhaps, provide a healthful solution.
The similarities between the British's East India Company, the Sassoon family, and the Sackler family are numerous: all gained an enormous profit from addiction and dependency of a hard drug substance; none faced severe consequences; all marketed the drug as a beneficial substance through propaganda, knowing the compound was harmful; none cared about the adverse effects the medication was causing people.
When will people see a pattern?
"Behind every great fortune, lurks a crime” - Honoré de Balzac