A British National Party (BNP) activist delivered leaflets blaming Muslims for the heroin trade intended to stir up religious hatred, a court has heard.
Anthony Bamber, 54, of Preston, printed and distributed the documents claiming Muslims were responsible for importing the drug from Pakistan and Afghanistan.
They demanded that followers of Islam "apologise and pay compensation" for the trade, Preston Crown Court heard.
Mr Bamber denies distributing material intended to stir up religious hatred.
The court was told that Mr Bamber, of Greenbank Street, targeted people in Lancashire, Cumbria, Manchester and North Yorkshire in his leaflet drops between March and November 2008.
David Perry QC, prosecuting, said: "This case is about hate speech.
"The objective of the letters and leaflets, the prosecution say, was to provoke hatred of Islam.
"The hatred was not directed just at the concept but at the followers of Islam - Muslims."
In March 2008, Mr Bamber and another man were spoken to police when they visited Barnoldswick, Lancashire, to deliver leaflets by hand, the court heard.
The leaflet said that 95% of heroin traded in the UK came from the Pakistan and Afghanistan region and was a "crime against humanity".
The leaflet added that Muslims were "almost exclusively responsible for its production, transportation and sale," the court heard.
Jury members were told that it went on to say the trade "caused far more suffering than slavery ever did" and has led to millions of premature deaths.
Muslims should be held to account with condemnation heaped upon them so that it would lead to the abolition of the trade, it concluded.
The leaflet was labelled a Preston Pals publication which was "committed to non-violent democratic resistance" and was set up in honour of the World War I battalion.
Mr Perry said the organisation had nothing to do with the leaflet, and its real intention was "obvious".
"It is no doubt intended to be dramatic. It is no doubt intended to capture the imagination and say 'look at what these people are doing, they are all criminals'.
"The prosecution say that the overall message is that Muslims are killing British youths and they must themselves be made to pay and it is your duty to make them pay. They are 'the invader'."
In June 2008 the head teacher of Sedbergh School, in Cumbria, received a large brown envelope which contained a number of letters with claims along similar lines.
Similar material was also sent to two barristers in Manchester and addresses in Lytham and Eccleston, Lancashire, and Harrogate, North Yorkshire, the court was told.
Mr Bamber, who is representing himself, denies seven counts of distributing threatening written material intended to stir up religious hatred.
The trial is expected to last up to two weeks.