"Every perception is to some degree an act of creation, and every act of memory is to some degree an act of imagination."

-- Gerald Edelman, Second Nature: Brain Science and Human Knowledge
[14]2 [14][14]Chapter 6: The Big Cycle of China and Its Currency2020-10-09JournalMore specifically, in the 1800s, the British East India Company and other merchants wanted tea, silk, and porcelain from China because it was extremely lucrative to sell back home.  However, the British didn’t have anything that the Chinese wanted to trade for so they had to pay for these goods in silver, which was a global money at the time.  The British paid out of their savings but were running out of this money, which led the British to smuggle opium into China from India which they sold for silver which was used to pay for the Chinese goods.  The Chinese fought to stop these sales, which led to the First Opium War in which the technologically superior British Navy defeated the Chinese in 1839-42 and led the British to impose a treaty on the Chinese that gave the British and other powers control of China’s main ports (most notably Shanghai, Canton, and Hong Kong) and eventually led to the loss of large parts of northern China to Russia and Japan and the loss of what we now call Taiwan to Japan.  The Qing government borrowed from foreigners to fight internal rebellions and owed huge reparations from these wars.  Reparations, especially out of the Boxer Rebellion (a Chinese rebellion against foreigners in 1901) created a huge liability—17,000 tons of silver equivalent—which was structured as around a 40-year debt.  The foreign powers were able to use tariff income on the ports they effectively controlled as a guarantee of the debt.  The Qing government, starved of financial resources, faced many uprisings over the couple decades following the Opium Wars and spent down their saving to finance fighting them.  That combination of 1) not having strong leadership, 2) not having sound finances, 3) having internal rebellions that undermined productivity and were costly in money and lives, 4) fighting foreigners, which was costly financially and in lives, and 5) experiencing some big disruptive acts of nature produced the mutually and self-reinforcing decline known as the “Century of Humiliation.” Continue reading…