This article examines the consequences of the opium concession system in the Dutch East Indies—a nineteenth-century institution through which the Dutch would auction the monopolistic right to sell opium in a given locality. The winners of these auctions were invariably ethnic Chinese. The poverty of Java's indigenous population combined with opium's addictive properties meant that many individuals fell into destitution. The author argues that this institution put in motion a self-reinforcing arrangement that enriched one group and embittered the other with consequences that persist to the present day. Consistent with this theory, the author finds that individuals living today in villages where the opium concession system once operated report higher levels of out-group intolerance compared to individuals in nearby unexposed counterfactual villages. These findings improve the understanding of the historical conditions that structure antagonisms between competing groups.