The law may be hallowed, but it does not exist in a vacuum. That much sociologists and lawyers have come to agree upon. But agreement ends on precisely what it is in the social milieu of law that determines its content and shape. For longer than we should be happy to admit the embarrassingly simplistic view that the law reflected customs and norms dominated sociological reasoning. Conflict has now replaced consensus as the prevailing perspective within which the law is analyzed.

What type of conflict? And how much does that view tell us? More often that not conflict analyses focus on the events taking place within a particular nation-state. Thus it is that people today are studying the dynamic of the lawmaking process in Austria to see how the changes in abortion laws have come about in recent years. Others are studying the process of lawmaking vis-à-vis women’s rights in the United States and Denmark.

An important point is missed, however, in these studies of law creation. Austria, Denmark, the United States, and England are not separate entities developing in their own particular way. It is far more significant that abortion laws are being changed throughout the Western capitalist world than what the specific quality and character of the process of change in Austria is. Put differently: we often lose sight of the fact that basic changes in law are a reflection of qualitative and quantitative changes in the political economy of a historical period and not simply the forces within a particular country. By way of explicating this, and also in the hope of developing a model of rule creation useful for analyzing law from a macro-political economic perspective, I will focus on the development of legislation and law enforcement practices with respect to opium and its derivatives (especially heroin).

My tack, however, will not be to start with the law and attempt to explain changes in it by reference to other historical forces. Rather, I shall begin with an analysis of opium as a product in the capitalist economic system and show, I hope convincingly, that it was the fact that opium became a product from which capitalism could profit that was the most important force behind the legislation and enforcement of laws relating to these drugs.

The Magic Plant

Opium is a plant which grows abundantly in warm climates at very high altitudes. Such unusual ecology is not found everywhere – it is found in that chain of mountains that extends from Turkey through Iran, India, China, and Southeast Asia. Opium is a plant which requires a very high investment in labor for its slow maturation. In addition to its unique ecology, this stretch of mountains also contains a very large number of people who live at a low standard and provide an abundant source of cheap agricultural labor.¹ Thus this strip of land has had for centuries a corner on the world’s supply of opium comparable to the corner held by the Middle East on the world’s supply of oil.

Someone discovered that the juice that oozes from the opium poppy can be taken internally with some highly desirable effects, the most important of which was, in the early days, relief of pain. In areas of the world where medicine was (and is) not readily available and many debilitating diseases (such as tuberculosis, leprosy, and the more common diarrhea and toothache) abound, an easily grown product that can relieve the pain of these diseases is most welcome.

So far as we know, Turkish traders were the first people to introduce opium to the rest of the world. In their search for exchangeable commodities, the Turks carried opium into India, China and Southeast Asia. This was taking place in the eighth and ninth centuries. All indications are, however, that the trade in opium was small and relatively inconsequential. A full-fledged market in opium was not introduced into South Asia until the emergence of capitalism and its attendant search for labor, profits, and markets.

The European Way

As capitalism emerged from the ashes of feudalism in Europe, the newly formed economic necessities pushed nations and capitalists in tandem to scour the world for new markets and products. Italy, Spain, and Portugal were at the forefront of this exploration and search for profits.

In the 1500s the Portuguese arrived in Asia with crews searching for goods to take back to Europe and for markets where items from Europe could be sold. At the time, the economies of the Asian nations were self-contained. There was some trade and a minimal amount of emigration among the Chinese who emigrated to neighboring lands. But commerce between the countries was limited.

Europe had little to offer Asia. While Asia had spices, tea, silk, and pottery which could turn a handsome profit on the European market, Europe had only silver or gold that interested the Asians. The purchasing of commodities such as silk and tea with silver and gold soon became unpopular with European governments, however, as it was apparent that the value of silver and gold was rising while the commodities purchased were consumed.

When the Portuguese began setting up small enclaves on Asian shores, they also moved to control the sea traffic through plunder and piracy. In the course of plundering Asian vessels, the more military, powerful Portuguese ships discovered that there was a small but already established trade in opium, at the time used primarily for medical purpose. Asian ships from Singapore and Bangkok carried opium to Indonesia, China and other Asian ports where they traded it for other commodities. The trade was small and sufficiently local so that opium use was rare and relatively inconsequential.

The Portuguese traders, however, were quick to realize that for at least a small part of their trade they could use opium instead of gold and silver. They first crushed the Asian traders and ran their vessels out of the seas. Then they began purchasing opium from Turkish and Indian traders, trading the opium in turn for spices and tea and so forth which they could sell profitably in Europe.

For the next three hundred years, European powers fought over Asian colonies, with the Dutch gaining the upper hand in Indonesia and much of Southeast Asia. During this period the colonial powers expanded into the interior of Asia, colonizing territories to various degrees. Increasingly the European colonizers turned to the opium trade as a source of income to pay for the military excursions and as a way of obtaining purchasing power for the spices, tea, silk, and pottery they sought. [Koh (20), pp. 51-52; Scott (35); Alexander (1); Lubbock (23)].

Opium dens began appearing in the major cities of Asia [Koh (20), p. 52]. India gradually replaced Turkey as the main opium-growing area. India’s opium was produced mainly by the British East India Company, a private company which had been given almost total political and economic control over the Indian colony by the British government. The British East India Company, through its representatives in Asia and local colonial governments, encouraged and expanded opium addiction throughout Asia and especially among the huge Chinese population. In the early years, the Chinese government, fraught with its own internal political problems and struggling to throw off the yoke of feudalism, paid scant attention to the growing spate of opium smoking. By the middle of the nineteenth century China came to realize that it was trading away its precious metals (silver especially) as well as its silks and tea for opium [Owen (31); Fairbanks (12)]. As Europe had tried to do earlier, China sought to stem the outflow of silver by curtailing the importation of opium. The Manchu rulers announced a stringent anti-opium policy with the explicit intention of stopping British and American traders. At the time, Whampoa was the major port through which opium flowed.² In 1839 the Manchu rulers appointed one Commissioner Lin to the task of stopping opium importation. Although the basic issue was the outflow of silver, Lin approached the problem moralistically and argued that it was a " . . . class of evil foreigner that makes opium and brings it for sale, tempting fools to destroy themselves" [Haley (15), p. 29].

Lin demanded the right to inspect all incoming vessels and to confiscate any opium found thereon. The American traders complied with this demand; the British traders refused. Meanwhile one of the principal companies working under a franchise from the British East India Company began a lobbying campaign in the English Parliament to support its right to trade opium in China [Johnson (18); Stelle (38)].

The debate in Parliament was short-lived. The Prime Minister at the time, Palmerston, authorized the British fleet to seize Whampoa, Canton, and other major ports along the Chinese coast. Thus began the infamous Opium War between China and Great Britain which lasted from 1839 to 1842. In the end the superior naval power of Britain brought the Manchu dynasty a most humiliating defeat. The terms of settlement after the war indicate the extent to which the British had subjugated the Chinese government:

1. Great Britain was given possession of Hong Kong.
2. British traders were given completely open access to five Chinese ports (including Canton).
3. The Chinese agreed to pay $21 million in reparation for opium that had been seized and destroyed by Commissioner Lin prior to the war.
4. British traders would henceforth be subject only to British, not Chinese, laws when conflicts occurred.
5. Smuggling was outlawed but opium was not specifically mentioned in the agreements. The responsibility for enforcing laws against smuggling was put in the hands of the smugglers (the British), not the persons smuggled against (the Chinese).

Several years after the end of the war a British consul in Shanghai seized three opium ships flying the British flag. He was subsequently removed from his post and transferred to India [Wu (43)].

After the 1839-1842 war, opium remained illegal by Chinese law although in effect the British East India Company and its affiliates had a free hand to import and distribute opium in at least five Chinese ports besides Hong Kong.

For the next fourteen years the opium trade flourished. However, in 1856 the Chinese commissioner of Canton seized a British-registered (but Chinese-owned) lorcha, the Arrow. There followed a second war between China and Great Britain which ended much the same as the first, except this time Britain was able to demand and get from the defeated Chinese the legalization of opium smoking and trading. The Chinese, however, did reserve the right to impose a tax on all opium imported: a decision which, paradoxically, would be a major factor in the decline of opium trading by the end of the nineteenth century.

The immediate consequence of China’s legalization of opium was to vastly increase the potential and actual market. Now British traders could bring to bear all their skills and imagination to spread the opium habit to the interior of China. The market was truly overwhelming and couched in the nicest of terms when the head of one of the major opium-trading companies noted that opium was a "comfort to the hard-working Chinese." [Owen (31), p. 243].

Legalization, however, planted the seed that would eventually destroy the profits and the British opium monopoly. For with legalization came (a) taxes and (b) the legal right of Chinese farmers to grow their own opium. Competition would shortly ruin the hard-won right to import opium from India to China.

From 1850 onward, however, British capitalism in China flourished in large part on the profits and labor advantages from the opium traffic. By the end of the nineteenth century it was often said that China had become a nation of opium smokers.

The growing and expanding Industrial Revolution in Europe increased Europe’s demand for markets and raw materials. Southeast Asia became a major pawn in the political economy of Europe’s capitalist development. Burma was occupied and became British Burma; Malaysia became a British colony and Thailand fell under Britain’s "sphere of influence." Laos, Vietnam, and Cambodia were brought together politically under French rule and were named "French Indochina." The Netherlands colonized Indonesia, Britain has possession of Hong Kong, and China was formally independent but in effect had a status similar to that of the other British "protectorates."

Opiate of the Masses

Labor was a major problem for the colonizers of Asia. Still thoroughly in the grip of feudalism, the inhabitants of Southeast Asia were little inclined to move to the plantations of foreigners growing rubber, sugar, cotton, jute, and hemp. And the labor force in Singapore, Hong Kong, Saigon, or Bangkok were disinclined to work on the docks at hard labor. Yet the demand for cheap labor was great, A famine in South China, the Tai Ping rebellion, and the drain of silver by the opium traffic combined to provide a convenient solution. The population that had moved out of other provinces concentrated in the Kwangtung area in the south of China from which they began soon to emigrate to other cities of South Asia.

As the population of China’s southern provinces reached a point of saturation, people began emigrating by the thousands. Some went as far away as the United States where they provided hordes of cheap labor for the railroads. Most, however, went to the nearby cities of Southeast Asia where they were employed as laborers on the docks. By 1910 there were over 100,000 Chinese in Saigon, 200,000 in Bangkok, and smaller numbers in every other major city in the area [Purcell (32) pp. 58,215].

Not all of the Chinese migration was, however, voluntary. Chinese "coolies" were an important source of profit for traders. And there is evidence that many of the Chinese brought to the United States and other parts of America were kidnapped and sold into indentured service. In Cuba, for example, many of the Chinese laborers who were interviewed about the circumstances surrounding their leaving China insisted that they did not leave voluntarily but were kidnapped [The Cuba Commission (9)].³ The same is true of many Chinese who were brought to the United States.

The Chinese brought with them the opium-smoking habits which had been so meticulously encouraged by British merchants and traders. The colonial governments were quick to recognize the value to them of encouraging the opium smoking of the Chinese laborers. Profits were substantial and an opium-addicted labor force was magnanimously compliant. In every major city of Southeast Asia from Rangoon to Saigon, colonial and local governments developed opium dens. The opium trade was carefully, albeit corruptly, organized and controlled by an unholy alliance between colonial officials, local governments, and a new class of entrepreneurs who were given government franchises to import and sell opium. Opium sales provided 40-50 percent of the income of colonial governments [McCoy (27), p. 63; Wen (42), pp.52-75]. Opium profits helped finance the railways, canals, roads, and government buildings as well as the comfortable living of colonial bureaucrats.

From time to time local governments resisted the expanding opium trade. King Rama II of Thailand decreed a ban on opium trading in 1811, and in 1839 the death penalty was instituted for trafickers [Skinner (37) pp. 118-119]. Unfortunately for King Rama II, British merchant ships which carried opium to the ports were beyond his control. When a British captain was arrested, the government rumbled its warships, and the local government quickly released the opium smuggler. In 1852, King Mongkut of Thailand succumbed to British pressure and created an opium monopoly under Thai government control and leased the monopoly to a wealthy Chinese merchant [Skinner (37) p. 119]. The king also established franchises in gambling, lottery, and prostitution. Opium became the mainstay of the government revenues. It was simultaneously the main thread on which the working class hung and was ensnared into providing labor for the European trade with these nations. It was opium, not religion, that was the opiate of the masses in Southeast Asia. By the 1940s there were in Indochina (Cambodia, Laos, and Vietnam) over 2,500 opium dens providing 45 percent of all tax revenues and an immeasurable percentage of the unclaimed salaries of both local and colonial government officials [McCoy (27) p. 76].

The Chinese immigrants into Southeast Asia and the United States were not, of course, the sole or perhaps even the principal market for opium. Opium smoking quickly spread to indigent American and Asian populations. The spread was encouraged by the same political and economic forces that had provided the impetus for its growth in China earlier.

Agri-Opium Business

British traders were joined in the late 1700s by American ships and merchants. However, the Jay treaty signed in 1794 prohibited American merchants from dealing in commodities under British control. The profits from opium were, however, too appealing to be turned down, and American merchants therefore began to introduce into China opium grown in Turkey – returning us, in some diabolically symbolic way, to the first opium route of the eighth century.

The American trade was less than that of its British competitors, but it was nonetheless large, profitable, and important for the development of U.S. capitalism. In the years 1816, 1817, and 1818 there was an annual volume of 672,900 pounds of opium handled by U.S. merchants. This volume of opium, according to the historians Latourette and Dulles, formed the capital which was basic to the growth of industrialization in New England [Dulles (10); Latourette (21)]. The profits from opium trading were invested in the textile mills in Massachusetts and other New England states following the introduction of the power loom in 1814. Thus the neat paradox that opium helped create a labor force for capitalist expansion in Asia and America and the profits from the opium provided the capital for the development of the factory system in New England.⁴

From the period 1830-1860 (the period of the two opium wars) American clipper ships, sometimes referred to as Opium Clippers, competed successfully with the British in the opium market. But when the British introduced the steamship, U.S. merchants lost their competitive advantage and the British once again dominated the trade.

This change was combined with the fact that the treaty of 1856 had set the stage for the emergence of Chinese competition in the growth and distribution of opium. Chinese farmers discovered that the high mountains of South China were amenable to opium growing. Since the profits from opium were higher, there was a rather rapid transformation of the agricultural products in many mountain regions of China first, and later other parts of Southeast Asia. By the late 1800s, "British and American mercantile firms, seeking more profit from other goods, slowly withdrew from opium trade" [Johnson (18) p. 18; Owen (31) p. 260]. The British continued active trading until World War I; but the total trade in opium that had once been the mainstay of American and British mercantile operations in Asia had declined gradually from the late 1800s.

The production of opium spread to the high mountain plateaus of neighboring countries. The border states of Laos and Burma and Thailand quickly shifted from traditional crops to opium as the profits form opium (as well as the pleasures of local consumption) became increasingly apparent. Britain’s loss of revenues was a boon for the impoverished hill tribes of Southeast Asia. World War I all but stopped the competition from British and American traders carrying Indian and Turkish opium, thus bringing down the curtain on the Asian opium drama begun some four hundred years before when the first Portuguese ships of war pirated opium from the small trading vessels that were then supplying a tiny market.

Between 1914 and 1940 the opium monopolies in Indochina (controlled first by the French, then by the Japanese colonial government) sought new, closer, and more dependable sources of opium and found them among the Meo tribes of Laos. Indochina’s opium production leaped from 7.5 tons in 1940 to 60.6 tons by 1944 [McCoy (27), p. 65-68]. Similar leaps and changes occurred somewhat later in the other countries –Thailand and Burma – that now comprise the Golden Triangle. When the Chinese Liberation Army emerged victorious in 1949 the supply of opium from China disappeared. This further stimulated opium growing in the Golden Triangle.

As was the case in the early years of colonizing Southeast Asia, opium smoking and trafficking were encouraged and stimulated by both local and colonial governments. Addiction provided profits for the governments and kept at least the addicted segment of the labor force dependent on their employers. With the emergence of subterranean warfare conducted by colonial government intelligence units, the opium trade came to supply a new link in the armament of the colonial nations. France especially used the opium trade as a source of revenues to finance its clandestine intelligence operations in Vietnam, Cambodia, and Laos. The wedge provided by the opium trade was two-pronged: first there was money earned that paid for government administrative costs; and second, the opium trade was a carrot offered to those hill tribes and local leaders who would support the French struggle against the communists.

When the United States took over from France the management of Indochina, it also inherited the link between military control and opium in these countries. It was necessary and indeed highly expedient to adopt the French policy of encouraging friendly tribesmen to grow and traffic in narcotics (opium) in return for fighting the communists.

America’s Central Intelligence Agency thus became a major trafficker in the international narcotics industry [McCoy (27)].

Eyewitness Testimony

Until very recently, the governments of Thailand, Laos and South Vietnam have been as dependent on the opium trade as they were at the end of the nineteenth century. The profits are immense. The former head of Thailand’s police department is alleged to have put over $600 million into European banks before he was forced to resign (Bangkok Post, 1973a). More recently the three Kitchihoun family members who ruled Thailand’s military dictatorship from 1964 to 1973 amassed over $200 million worth of property in Thailand in that short period of time and an unknown fortune stashed in secret foreign banks (Bangkok Post, 1973b). Much of this fortune derived from their share of the profits from the opium trade. The South Vietnamese governments from Diem to Thieu profited immensely as well. In Laos, General Ouane openly admits that without the huge traffic in opium between his country and Saigon, which he controlled, Laos could not have survived economically (Bangkok Post, 1973c). No wonder then that the United States provided the planes and the military equipment that enabled General Ouane to ship Laotian hill tribe opium to Saigon, where it was processed into heroin and either sold to American G.I.’s in Vietnam or shipped back to the United States – sometimes in the coffins of American soldiers [McCoy (27)].

Opium traffic still plays an important part in capitalism’s political economy. In Southeast Asia the Shan tribesmen with their own independent armies, the KMT (Chinese Nationalist Army) and the Laotian Armed Forces, were, until the Cambodian Revolution, three principal sources of transporting and marketing opium from the hill tribe growers in the Golden Triangle to the middlemen who oversee its passage to the laboratories in Bangkok and Hong Kong. These three groups – the Shan, the KMT and the Laotian Armed Forces – were supported by arms and technical assistance from the United States because they were believed to be serving U.S. interests by providing a wedge against the communist liberation armies in Burma, Cambodia, Laos, and Thailand.

Another parallel between opium use today and the historical roots of opium smoking in Asia is its function as both an expression and a suppressor of social conflicts. In Vietnam the widespread use of heroin by the American Army may have reflected the overt expression of rebellion so often commented on as a characteristic of the people fighting in that war without public sanction. Heroin in the ghettos of America’s large cities may also serve the same purpose it did among Chinese laborers of the late nineteenth century: immobilizing a segment of the discontented laborers who might otherwise more openly fight against the oppression and despair of their position at the bottom of the scale in a class society.

Opium and Heroin in the United States

The use of opium and heroin in the United States must be understood in the same general terms that have been applied to understanding its Asian background. The first major influx of opium smokers came when the Chinese came to the West Coast of America as coolies working in the gold and silver mines and building the railroads that would connect the Eastern manufacturing centers with the Western frontier.

Conditions of work for the Chinese immigrants were abominable. The workers were brought without families, were forced to labor long hours under the worst physical conditions imaginable and with little relief. Opium smoking was a way of lulling the psychological pain of the arduous conditions. It was also an extremely effective way of reducing the pain of physical illness for which medical care was practically nonexistent.

From the point of view of the employers, the laborer’s opium smoking was a blessing. The employers, by controlling the importation and distribution of opium, made a profit from selling it to the workers. Furthermore, the threat of withdrawing the supply of opium kept many potential labor complaints from becoming a serious threat to the employer.

It was in this social situation that opium smoking began a slow but steady growth throughout the American working class, especially in the West, where the work was often unbelievably demanding, where there were few families in the mines and cities and where even "women for hire" were difficult to come by. In the late 1800s when opium was legally imported and sold, the annual importation into the United States exceeded 500,000 pounds. The market was supplied by normal business channels. Opium was still coming into San Francisco and some had begun to find its way East to Chicago and New York. Opium dens have been reported as far south as New Orleans and as far north as Montreal during the early 1900s.

The following are estimates of the amount of opium imported into the United States (most of it legally) during 1860-1900:

By the 1800s, mining and railroad building began to decline in the West. Thus the need for cheap labor such as had been supplied by Chinese immigrants declined as well. The U.S. government became concerned over the growing number of immigrants entering the United States who were rapidly becoming a burden rather than an economic asset. An envoy thus was dispatched from Washington to China with the mission of gaining Chinese cooperation in reducing immigration to the United States. China was willing, it turned out, providing the United States would in turn take steps to reduce the opium being brought into China by American ships. The United States agreed – the opium business was substantial for a small group of shipowners, but as we have seen, the market inside China was rapidly declining, and in any case the lion’s share of the market was controlled by the British. The United States then passed the first anti-opium legislation in the world: a statute at large passed in 1886 making it illegal to trade in opium.⁵

Thus, by the beginning of the twentieth century the opium trade and traffic had shifted substantially. Southeast Asia was still a major market, as was China. The supply of opium, however, had begun to shift from India to Turkey to sources closer to home: mainly South China and the Golden Triangle. Turkey and India were still producing opium which was shipped to Europe and the United States. Opium dens were run and organized by the governments of China and Southeast Asia and the profits form these enterprises served to support not only local governments but colonial governments as well. The United States had become a market of some importance for opium from Turkey, India, and Southeast Asia. Probably the major routes were for morphine to be manufactured in Europe, out of opium grown in India and Turkey, to the United States and throughout Europe. Opium in its raw form was being smuggled into the United States from Southeast Asia.

As the Asian opium trade became less profitable for Europeans, anti-opium legislation began to appear in most Western countries. A series of International Opium Conferences (Shanghai in 1909; The Hague during 1911-1914; and Geneva in 1924) were the consequence of the changing economic realities which helped spread anti-opium sentiment and subsequent legislation.

In 1898 a German pharmaceutical company, Bayer, began distributing a patented product called heroin, which, the manufacturer claimed, was a nonaddictive drug with the same medical value as opium, without the undesirable side effects.

The United States in 1914 passed the Harrison Act which made it illegal to trade in opium or its derivatives (heroin included) without registering with the U.S. government and paying a small tax. As a result of bureaucratic maneuvering (particularly the careful selection of cases for appeal) the Federal Bureau of Narcotics succeeded in getting a series of court decisions (especially in the U.S. Supreme Court decision Berhman v. the U.S.) which made it illegal for doctors to prescribe morphine, opium, or heroin to anyone who was an addict [Lindesmith (22)].

World War I interrupted the traffic in opium. This provided increased incentive to grow the poppy in China and Southeast Asia, as trade routes with India and Turkey were now totally severed; it also interfered somewhat with the opium traffic to the United States. Nonetheless, enough opium and heroin were imported throughout the war to supply a stable addict population. World War I also inadvertently opened up connections with Turkish and Middle Eastern opium sources.

Through connections with the Hearst newspaper chain, "Black Tony" used delivery boys and street-corner paper sellers to distribute opium and heroin to his customers. Interestingly, this same pattern appeared in Chicago about this time [Gosch and Hammer (14)].

By 1938 the heroin business in the United States had become one of the nation’s larger industries. Senator John Coffee estimated that the sale of heroin at this time exceeded $1 billion annually [Congressional Reports (40)]. We know less that we should about the organization of this industry and the extent to which it was monopolized. There is some evidence, however, that by the close of the 1930s Vito Genovese had managed to gain control over some of the heroin business through working agreements with people in Italy and France [Gosch and Hammer (14)]. Genovese may have worked closely with John Erickson, a Scandinavian who had inherited the illegal business empire of Arnold Rothstein when the latter was murdered in 1928.

World War II interrupted a great many things, including the smooth flow of morphine and heroin from Europe to the United States and of opium from Asia. According to Alfred McCoy, the addict population in the United States declined to such an extent that following World War II the "heroin problem" had become quite manageable [McCoy (27) pp. 30-57].

The affluence of the fifties created unprecedented demand by the consuming American public for everything from ballpoint pens to refrigerators. The living and working conditions for many Americans created an unprecedented demand for narcotics as well. The iron law of capitalism is that where there is a demand there will be a supplier, if the profit is high enough. Suppliers emerged throughout the United States but especially in the largest cities where living conditions and political forces combined to make the demand and distribution of heroin manageable.

Prohibition had produced a large number of businessmen with the knowledge and the capital capable of organizing international cartels for the production, shipment, and distribution of illegal goods. Meyer Lansky, Vito Genovese, and Joe Adonis had established a network of business and political contracts throughout Europe, Latin America, and the Caribbean that made the importation of illegal commodities highly profitable.

These businessmen and their associates had very large profits from gambling and real estate investments made during the 1930s and 1940s [U.S. Congress (39)]. Capital was of course essential. Lansky is reported to have taken $20 million to France in the 1950s to gain a monopoly on the heroin produced in Marseille: heroin which was manufactured from opium base that came mainly from Turkey via the Middle East. The success of Lansky’s mission was such that thereafter Turkey and Marseille became the major suppliers of America’s illegal opiates:

Our knowledge about the inner workings of the heroin industry is sketchy. We can safely conclude, however, that the profits from opium and heroin were growing at a rate that would have made even the growth rate of General Motors and International Business Machines seem modest. The average heroin addict in the United States in the early 1970s was spending $30,000 a year on heroin [Brown and Silverman (2)].⁷ While this is a very high figure, it is noteworthy that it is an average based upon the fact that not all heroin addicts are "street people." Many addicts are wealthy professional and business people who no doubt pay considerably higher prices for their "shit" than do the people in the ghettos and the slums.

Accepting, for the sake of argument, this average expenditure per addict enables us to also estimate the gross volume of business from heroin. If, as most experts agree, there are at least one million addicts in the United States, then this means that the annual gross sale of heroin in the United States today exceeds $30 billion [DuPont and Greene (11)]. Some sense of the importance of this industry to the national economy is gleaned from the fact that this would make the heroin industry comparable in gross volume of business to the largest corporations in the United States: in 1970 General Motors, Exxon, IBM, ITT, and a half dozen other of the largest multinational corporations in the world had a gross volume of business of less than $30 billion a year [Council of Economic Researches (8)].⁸ Indeed, there were only twenty countries in the world with a Gross National Product in excess of the gross volume of business in the heroin industry in the United States. (See Table 1.)

Table 1. Gross National Products of countries and net sales of companies interspersed: by rank, 1970*

The heroin industry is a highly competitive one. That Meyer Lansky or Vito Genovese or Joe Adonis might gain a competitive advantage does not mean they could do this without a struggle. Nor does it mean that their monopoly position is unassailable. There is evidence that the heroin industry is currently undergoing a substantial upheaval brought about by the emergence in the late 1960s of competitive forces with substantial political influence. To understand this, the latest chapter in the political economy of heroin, we must digress slightly.

The development of the state in the modern world is such that virtually every aspect of economic life is influenced by the decisions of the state. Laws, regulations, government contracts, licenses – what the lawyer Charles Reich has called "The New Property" [Reich (33), pp. 765-782] – are the life substance of most industries in the capitalist world. Illegal businesses, including the business of heroin, are no exception. State and government cooperation, especially the cooperation of those agencies responsible for regulating the industry, is an essential ingredient for protecting profits and maintaining monopolistic advantages. State cooperation, in turn, depends upon being able to influence those political leaders who most directly affect the industry.

Throughout the period from 1930 to 1960 the major corporate executives who owned and managed the heroin industry in the United States were well represented by key people in state and federal government. The heroin industry had grown up during the heyday of the Democratic Party – quite predictably, their ties and allegiance to the Democrats were stronger than their connections with politicians in the Republican Party.

But the hegemony of the Democratic Party was undermined in the 1960s. Even old established labor union ties, such as that between the Teamsters and the Democrats, began to show signs of wearing thin as Jimmy Hoffa was put in prison at the insistence of a Democratic-controlled Attorney General’s office [Sheridan (36)] and the Teamsters subsequently shifted their allegiance from the Democrats to the Republicans (New York Times, 1972).

The emergence of Richard Nixon as a political force of substance posed a threat to the established monopoly in the heroin industry greater than any experienced since the 1930s. The Nixon Administration adopted policies which were clearly inimical to the established monopoly. First and perhaps most importantly, heretofore unheard of pressure was brought on Turkey to curtail its production of opium. At the threat of dissolving the massive allocation of Foreign Aid, the Nixon Administration forced Turkey to enforce its long-existing laws restricting the growth of opium. Secondly the Bureau of Narcotics and Dangerous Drugs (formerly the Federal Bureau of Narcotics) was expanded and given substantial encouragement to curtail the heroin traffic from Latin America and France – an importation route established and largely controlled by Meyer Lansky and his associates [Clark and Horrock (5)].

The anti-heroin war begun by President Nixon and his associates might have reduced the amount of heroin coming into the United States save for one small thing: at the same time that effective programs to reduce the flow of heroin from Turkey and Marseille were being implemented, the supply of heroin from Southeast Asia was growing by leaps and bounds. From 1968 to 1972 the amount of heroin coming from Turkey declined by almost 50 percent. The amount of heroin consumed by the United States supplied by Southeast Asian sources increased by 20-30 percent [U.S. Congress (41)]. Whereas in the mid 1960s it was estimated that over 95 percent of America’s heroin was from Turkey, by 1971 it was estimated that less than 50 percent was coming from Turkey [McCoy (27) pp. 52-67].

In 1968 Santo Trafficante, Jr., took a trip to Southeast Asia, visiting Bangkok, Thailand, Singapore, and Saigon [McCoy (27) pp. 52-67]. This trip was to establish agreements between Southeast Asian producers and distributors for the importation of heroin into the United States. Santo Trafficante, Jr., is a Florida-based financier and organizer of illegal businesses whose roots in organized crime were inherited from his father. For almost twenty years he shared an uneasy alliance with Meyer Lansky. The roots of their competition go deep and began in the late 1950s when, at a crucial meeting in Florida, Santo Trafficante, Jr., agreed under threat of death to arrange for the murder of his close personal friend, Albert Anastasia, allowing Lansky and his associates an opportunity to murder their chief competitor [Messick (29), pp. 209-215; Cook (7); Gosch and Hammer (14)].

Following Anastasia’s murder, Lansky and Trafficante cooperated in investments in Cuba, the Bahamas, Florida, and the heroin trade. Trafficante also had close financial and business ties, however, with Lansky competitors: among them Bebe Rebozo [Sale (34); Messick (29)].

A number of events suggest that the 1968 trip of Trafficante was connected with an attempt to reduce Lansky’s control of the heroin monopoly. The major organizer of the opium and heroin traffic in Southeast Asia was a Chinese businessman from Laos by the name of Huu Tin Heng, who organized the Chiu Chow syndicate [McCoy (28)]. Huu was, among other things, the Laotian manager of the Pepsi-Cola company. The president of Pepsi-Cola has been one of Richard Nixon’s long-time and most important friends and supporters (Lurie, 1972; Mazo and Hess, 1968). In return, Pepsi-Cola has received substantial help from Nixon, such as monopoly franchises in foreign countries, including a franchise on the Soviet Union market [Sale (34) p. 1].

Following Nixon’s election as President, a campaign to expose and eliminate "organized crime syndicates" throughout the United States was widely publicized. In fact the campaign was only directed at selected syndicates in cities where their support was inimical to Nixon and his Republican associates [Chambliss (4)]. One city where this was the case was Seattle, Washington, where a Nixon-appointed U.S. attorney successfully spearheaded a campaign that exposed a criminal syndicate involving over fifty of the city’s police and political leaders. It was subsequent to this "clean-up" of Seattle’s "mafia" that Seattle became a major import center for heroin in the United States: heroin coming from Southeast Asia, from the Chiu Chow connection, and in direct competition with Meyer Lansky’s European connection. No wonder, then, that Meyer Lansky had over a quarter of a million dollars in campaign contributions for Hubert Humphrey in 1968 in an attempt to stop Nixon, nor that Lansky had gone to Washington State and offered to finance the gubernatorial campaign of the Democratic candidate in an effort to unseat the Republican governor who was an ally of Richard Nixon. Both Humphrey and the Democratic gubernatorial candidate lost, and the Southeast Asian – Seattle heroin route opened up.

The Narcotics Bureau’s arrests and seizures of heroin from Europe were increasing at a dramatic rate. In 1968 the Federal Bureau of Narcotics was transferred from the Treasury Department (where it had been established at its inception) to the Justice Department. Dr. John Ingersoll was appointed head of the new bureau, which was renamed the Bureau of Narcotics and Dangerous Drugs.

In 1968 and 1969 the total seizures of illegal heroin coming into the United States were under 200 pounds. However, the reorganization resulted in the most effective attack on the international heroin traffickers ever put together by the U.S. government. By the end of 1970 the government had seized almost three times as much heroin as during the preceding years (over 600 pounds). And in 1971 the increase in the number of seizures was over 1,600 pounds [Browning (3) p. 164]. In 1972 the combination of the efforts of Customs and the Bureau of Dangerous Drugs resulted in the seizure of 2,700 pounds of heroin, almost fifteen times as much heroin as had been seized only four years before.

By 1972 the Nixon Administration has seriously disrupted the established monopoly. Furthermore, the emerging control over the Southeast Asian supply was getting firmly established. At this point the Attorney General and the President proposed yet another reorganization of the narcotics enforcement process. The reorganization culminated in the formation of the Drug Enforcement Administration. The seizure of heroin immediately plummeted to 900 pounds in 1973, and in 1974 it fell to less than 600 pounds. Dr. John Ingersoll resigned his post as head of the bureau and accused the Nixon Administration of interfering with the agency [Browning (3), p. 164].

Watergate, and a series of scandals, undermined Richard Nixon’s power and he resigned the presidency. With his resignation went the shift from European to Southeast Asian heroin. Seattle’s importation of heroin began to decline almost immediately. Dr. Robert L. Dupont, Gerald Ford’s Presidential Adviser on Drug Abuse Prevention, in testimony before Congress, wondered: "Why hasn’t Southeast Asian heroin come to the United States more than it has?" [U.S. Congress (4)].

Other officials have wondered why Seattle, posed as it was to become the major heroin port of the United States, lost some of its momentum following Nixon’s resignation.

The answer, I would suggest, is that with the demise of the Nixon Administration the old established monopoly of Lansky and his associates were able to re-establish their ties and their routes. Trafficante and Rebozo will not have resigned quietly, and there is indeed evidence that in Corsica, France, Amsterdam, and Southeast Asia there is at this moment considerable overt conflict and fighting for control of the international traffic in heroin. Southeast Asian producers have rapidly increased the market for, and their control over, heroin distribution throughout Europe, as one Drug enforcement Administration officer put it, "from Spain’s Costa del Sol to Oslo" [McCoy (28)].

And within the United States the competition is fierce. Turkey is producing opium again. Marseille is once again going at full stream and the routes through Latin America and Mexico are wide open. Seizures of incoming heroin are down, and while competition is intense the supply is steady.

At the moment there is "chaos in the industry." Southeast Asia has become an unreliable source of opium. Laos, Cambodia, and Vietnam are no longer the distribution and processing centers they were while the American Army was fighting its infamous war. There is still, nonetheless, a large growing area of Burma, Laos, and Thailand where magnificent poppies are produced. There is also a well-worn and heavily used route through Thailand and Burma to factories in Hong Kong. And there are traffickers in the United States – among them Santo Trafficante, Jr. – who are connected with the production and shipping of heroin from Asia. These people are not giving up their control or profits easily simply because "their man in the White House" has moved to San Clemente. There is open warfare in Corsica as different elements vie for monopolistic control over the distribution and processing of heroin. There is warfare among competing groups of middlemen in Latin America and Europe (Amsterdam has emerged as a major transfer point for heroin from Europe to the United States, and Chinese merchants involved in the trade are killing each other – literally). And in the United States the battle for control is taking the form of marshaling political assistance from friendly government politicians as well as eliminating competition wherever and whenever possible. The end is not in sight, but the tendency to monopoly is strong. No one, least of all the police and cooperating politicians, wants the war to continue. They, as well as the most powerful executives in the industry, are doing everything possible to bring order into the industry and re-establish a smooth-working monopoly. Exactly who will control the business when the present crisis ends is at the moment problematic. What is not problematic, however, is the state of this industry: it will continue to thrive, to expand, to reap large profits and to support large numbers of law enforcement people, politicians and specialists in illegal business.

Conclusion

For the user, drugs represent a source of relief from the pains of living: be they physical, as in tuberculosis or leprosy, or mental, as in anguish and ennui. For the seller they represent a source of profit and the satisfaction of "doing business." For the politician they solve some pressing problems: like how to keep some of the unemployed masses happy. For the academic they represent an endless source of data for theorizing.

These and other uses are the root of the "drug problem." Given the alarming amount of attention devoted to the subject, one might think that yet another way of analyzing it would be unnecessary. Yet there may be some merit in looking at the historical development of drugs from the perspective of a political economy of law: that is, a look at the political and economic forces that have shaped the laws governing the manufacture, distribution, sale, and technology of the drug industry.

The starting point for this analysis is capitalism as an economic system. Not a particular capitalist nation-state. But capitalism. For it has been the moving force behind the development in the market in drugs, legal and illegal. Inextricably linked to capitalism are various political forms: colonial government, electoral politics, and the emergence of the state, which have also played critical roles.

Opium and its derivatives are particularly interesting because of their intense hold and their long history. The opiates also have a certain smack of intrigue which heightens the joy of investigation while depressing the spirit of humanity. It is not a particularly happy scene but it is nonetheless informative. In the end we can only hope that knowledge will lead to liberation from opiates in all their forms.

1. Paul Takagi writes: ". . . an important reason why opium is found in the areas you specified is because of the supply of a cheap labor force. Opium was cultivated in the United States during the nineteenth century. The morphine content did reach the desired level, around 14 percent, but the cost of labor made the experiment prohibitive. I once calculated the average yield per acre and it comes to around eight pounds. The description of how it is harvested and the amount of time available to do the harvesting gave me the impression that it takes a huge amount of labor. For opium growing in the United States see: Consular Reports, No. 86, Vol. 24, 1887, p. 357; see also Hunt’s Merchants Magazine, "The Production of Opium in Alabama," 1856, p. 249; and Stephen Holder, "Opium Industry In America," Scientific American, 1898, p. 147.
2. Paul Takagi writes: "I have the impression that Whampoa was the international settlement and the ‘thieves’ den of China’ at this time."
3. I am indebted to Paul Takagi for pointing this out to me. He also writes: "Professor Ling Chi Wang at UC Berkeley says that there are Chinese documents showing that many Chinese who came to the United States were also shanghaied. Robert Schwendinger of San Francisco who is interested in maritime history mentioned to me that he has data from the logs of ships captains indicating the shanghaiing of Chinese workers."
4. Paul Takagi pointed this out to me.
5. Paul Takagi brought this statute to my attention in a letter.
6. See also Alvin Moscow, The Merchants of Heroin, Dial Press, New York (1968).
7. For estimates of prices paid by street addicts see Robert A. Gordon and William E. McAuliffe, American Journal of Sociology, January 1974.
8. Fortune Magazine also publishes an annual review of the profits of America’s 500 largest corporations.

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