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The Canton System was a system of trade between China and Britain. Canton is the westernized name for the city of Guangzhou which was the city through which all (legal) transactions were made. The British East India Company, which had a monopoly on trade from Britain, wanted tea from China. Because the Chinese were not interested in any of the manufactured goods that Britain could provide, the British payed mostly in silver and silk. It really pissed off the Brits that the scale was tipped in China's favor, and they needed a solution to this problem.

In order to aquire a sufficient amount of silver to sustain this unfavourable balance of payments involved in their trade with China, the British East India Company deliberately stimulated the production of opium in India. The Company was careful to leave its distribution to private merchants, but the Chinese emperors (who were Manchus, by the way) were not fooled, and a ban was placed on all transactions involving opium at Guangzhou. As a result of the huge amounts of opium being shipped into the country, there was a great amount of drug addiction in the southern provinces (not to mention the mounting export of silver to pay for the habit).

Emperor Dao Guang was so concerned by this situation that (in 1839) he dispatched a commissioner with instructions to stamp out the whole business. First, the commissioner (Lin Zexu) broke up the network of Chinese importers and suppliers. Next, he destroyed the opium stocks of European merchants without compensation, and obliged them to promise to end the traffic of the drug. Lin Zexu also addressed a letter to Queen Victoria, appealing to her sense of decency. He wrote:

I am told that in your country opium smoking is forbidden under severe penalties. This means that you are aware of how dangerous it is. But better to forbid the smoking of opium would be to outlaw its sale and, better still, to outlaw the production of the drug altogether. As long as you avoid opium yourselves, but continue to make it and tempt the people of China to buy it, you will be seen to have compassion for your own lives, but none whatsoever for the lives of people who are ruined by your pursuit of gain. . .And who can say whether one day your own subjects will not only make opium, but also smoke the drug themselves.
Had the young queen received this communication, she may have had second thoughts to Lord Palmerston's (her first minister) justification for war. He maintained that the only way to end the opium traffic was to suppress the drug's use in China. Profit carried the day, and British gunboats were ordered to overturn Lin Zexu's measures.

See opium war