It has been noted that British policy makers thought that the Chinese should (Chapter 14) and could (Chapter 15) buy more British manufactures. This chapter shows that their perceptions of the pertinent statistics led them to believe that the Chinese could do so while at least maintaining the existing level of the purchase of opium from India. It attempts to evaluate further aspects of free-trade imperialism and other pertinent theories, exploring still further the origins of the Arrow War.

I. A debt-ridden India

It is often said that India was a tremendous asset to the British Empire. In fact, for the period under review India was a heavy liability.

One problem was that India, administered by the British East India Company, had a net revenue which often fell short of expenses. For example, the company was in the red for four out of the seven years immediately before the Arrow War began in earnest (see Table 16.1, column 2). Even during the three years when the company had a surplus (see Table 16.1, column 1), it was far less than the annual deficit in the other years. Normally, loans are raised only when revenues are insufficient to meet expenditures. But Table 16.1, column 3, shows that whether the company was in the black or the red, it continued to borrow money both in England and in India. Why?

The answer is that these loans were related to the extension of British rule over more and more of the Indian subcontinent.