Very little is known about Lao Tze. So little that even his surname is clouded
in uncertainties. However, it is generally accepted that his name was Li Er (李耳)
or Lao Tan (老聃), and was born in the state of Chu (楚國) during the
Zhou dynasty (周朝), but the date of his birth is another mystery.
Another accepted fact is that he was a keeper of archives (守藏室之史) in
the Zhou court. It was while working in this capacity that Confucius (孔子) came
and consulted him on matters of ceremonies and rites. Based upon this encounter
it is assumed that he was older than Confucius.
It is unclear when he left this post. Legend has it that after leaving he decided to travel westward riding an oxen. At this time a purple cloud started to hoover over him. Thus this journey is generally referred to as the Purple Cloud from the East (紫氣東來). One day he came to China's westmost outpost (函谷關).
The guardian of this outpost had heard of Lao Tze, his learnings and his westward journey. He specially ordered his underlings to keep their eyes open for Lao Tze and when spotted should reported to him immediately. Upon meeting Lao Tze, he accorded Lao Tze the respects of a student to a teacher and asked Lao Tze to leave some of his wisdom in form of writing behind. At this point Lao Tze wrote a 5,000 word essay titled Tao Te Ching (道德經). After he finished the essay, Lao Tze continued his westward journey and not to be heard from again.
The philosophy as outlined in Tao Te Ching became popular during the early part of the Han Dynasty (漢朝). It is credited with calming the country and settling the population after the turmoil of the Warring States (戰國), harsh Qin Dynasty (秦朝) and the ensuing civil war (楚漢相爭). From this base Wu Emperor (漢武帝) was able to launch his campaign of driving the Northern nomads (匈奴) far into the desert.
Hundreds of years later, the Taoists (道教) while battling Buddhism (佛教) for followers adapted Tao Te Ching as their religion's dogma. In turn they honoured Lao Tze as the founder of their religion. However, honours didn't really started to pour in until the Tang Dynasty (唐朝).
Keep in mind that since the latter part of the Han Dynasty, bloodline and ranked clans (門第望族) were of utmost important. At one point clan membership was the only requirement for high ranking positions in government. Capability and learning weren't even considered. The royal family of the Tang Dynasty who was very conscientious of its somewhat mixed bloodline set out to claim direct linkage with Lao Tze. Thus Taoism became the national religion during the Tang Dynasty.
It all started in May 620AD (武德三年) when Ji Shan (吉善) of Jinzhou (晉州) walking along Sheep Horn Mountain (羊角山) met a very dignify-looking old gentleman on a white horse with red mane.
The elderly man said, "Go and inform the Tang Emperor that I am his ancestor. At the end of the year there will be peace and his descendants will be on the throne for a thousand years."
Lee Yun was amazed by this and decided to build a temple where the alleged meeting took place. This was the first step in solidifying the link between the Tang Emperor and Lao Tze. Later a royal edict officially ranked Taoism ahead of all religions.
The story of Lao Tze By Kevin Lee