Opium and empire: some evidence from colonial-era Asian stock and commodity markets.

We assess the impact of the opium trade on the economies of colonial Malaya, Netherlands Indies, and China from 1873 to 1911 using a new database of stock and commodity prices, plus measures of government revenues, commodity exports, and immigration. Stock returns for a few Malayan industries related to international trade are significantly correlated with opium price changes, as are prices for labour-intensive, Chinese-dominated export commodities such as tin and gambier. However, opium price changes explain, at most, only a small fraction of the behavior of stock and commodity prices. On balance, stock and commodity markets ascribed only secondary importance to ups and downs in the opium trade as measured by the price of the drug.