James R. Fichter. So Great a Proffit: How the East Indies Trade Transformed Anglo- American Capitalism. Cambridge: Harvard University Press, 2010. 384 pp. $35.00, cloth, ISBN 978-0-674-05057-0.

Philip J. Stern. The Company-State: Corporate Sovereignty and the Early Modern Foundations of the British Empire in India. Oxford: Oxford University Press, 2011. 300 pp. $27.95, paper, ISBN 978-0-19-993036-4.

Reviewed by Aaron Windel

Published on H-Business (December, 2014)

Commissioned by Tracey Deutsch (University of Minnesota)

How corporate capitalism came to dominate through theories and practices of early modern social relations and to exert new infuences and statecraft. James R. Fichter's So Great a Proffit: controls over the conduct of populations in the How the East Indies Trade Transformed Anglo- global South remains an unsettled and urgent his‐ American Capitalism explores how early U.S. torical problem. Two recent books explore the trade to Asia shaped early American capitalism place of the early modern corporation in shaping and infuenced Britain's mode of imperial rule. the trajectories of commercial and plantation cap‐ Their concerns and methods difer. Stern is italism and also reveal much about Atlantic-world much more interested in pinning down historical‐ and Indian Ocean political thought and national ly specifc meanings of sovereignty and in dis‐ and imperial state formation. Philip J. Stern's The cussing the application of company-state power. Company State: Corporate Sovereignty and the Fichter is less interested in questions of theory Early Modern Foundations of the British Empire and political economy and instead focuses on in India examines the early modern East India class formation to track the rise of an American f‐ Company as an imperial sovereign legible nancial elite and to measure its infuence in shap‐ H-Net Reviews ing free trade politics in Britain and over the At‐ Stern's study brings important new insights to lantic and Indian oceans. He wants to understand bear on the question of how European imperial how wealthy American traders competed with the states emerged, how they ruled territory and sub‐ during its decline in the late jects, and how colonial power related to sources eighteenth and early nineteenth centuries. Taken of authority in Europe and Britain. Crucially, he together these books trace a period from roughly blurs the distinction between a trading company 1600 to 1815, from the rise of the East India Com‐ and a state. Stern's most important contribution to pany to its subsequent military-settler occupation debates on early modern commerce and empire is and rule at key ports in the Indian Ocean, and f‐ to show that to trade in the period was in fact to nally to its eventual absorption into the liberal na‐ administer a state. Stern relies on company tion-state empire that dominated the nineteenth records (especially the more qualitative aspects— century. correspondence, legal opinions, etc.) and court Both Stern and Fichter explore the East India cases to show that company authorities through‐ trade for what it tells us about the wider shape of out the seventeenth and eighteenth centuries ex‐ "Atlantic world" political thought, exchange, and plained their activities as building up spiritual imperial government. Fichter surveys a shorter and intellectual foundations for self-sustaining in‐ and later time frame than Stern over a wider frastructures of colonial government. space—anywhere the Americans searched for op‐ Central to his argument are his eforts to re‐ portunities to enhance their trade in the Pacifc, cover specifc early modern meanings of Atlantic, and Indian oceans, or the China Sea. His sovereignty and to understand the East India analysis emphasizes high politics and the very Company within this matrix. To do so, he explores rich—the 1 percent in fact (Fichter, p. 111). Stern's a less frequently seen thread in early modern po‐ study of the seventeenth- and eighteenth-century litical thought concerning sovereignty in the cor‐ English East India Company encompasses the poration. The corporation—whether in the form smaller area of the eastern Atlantic and mostly of a chartered company like the East India Com‐ coastal zones in the Indian Ocean east of the Cape pany or a municipality in (as in the incor‐ of Good Hope and extending to Indonesia. He porated City of )—opened a space for gov‐ roots the East India Company in early modern ernment outside the ambit of Crown and Parlia‐ ideas about corporate sovereignty. ment. The East India Company attempted to fll Stern's book has much to teach us about the this space east of the Cape of Good Hope. role of the corporation in early modern political The company’s sovereignty was precarious. thought. As it turns out, corporations are not just Corporate authority was challenged by interlop‐ people, but almost demi-kings. Company leaders ers (unlicensed traders), pirates, rebels, and rival to be sure were intent on profting from trade rulers. Sometimes to defend its constitutional po‐ with Asia, but they also thought of themselves as sition or the security of its vulnerable colonies, delegated sovereigns in the East and wore many the company had to appeal to the English Crown, of the habits of the absolutist states of Europe. depending on it for efective rule. Company They derived their rationale of rule from the sovereignty also was derived from—and thus lim‐ same sources of political theory as the English ited by—Asian rulers from whom the company kings. Importantly, this included connection to or‐ had received grants and signed treaties. To com‐ ganized religion. Their "trafck" in trade goods pany leaders, Stern notes, a Mughal imperial far‐ was part of their Protestant mission (Stern, p. man was as crucial as its charters from the Eng‐ 112). lish Crown for giving force to its jurisdictional

2 H-Net Reviews claims. None of this, however diminished the con‐ settlements, as company ofcials hoped, "as natu‐ viction among company leaders that they were rally as Crowes resort to carrion" (p. 85). the true captains at the helm of English govern‐ The violence of the company-state is as im‐ ment in the East. portant to Stern's account as the intellectual dis‐ Company sovereignty rested on religion as course that the company relied on to explain its well as politics, linked to early modern theories of right to rule. Rights claims had to be backed up by sin and indulgence that regulated a Christian the waging of war and by the routine use of com‐ kingdom's commercial interaction with non-Chris‐ pany-state violence in the form of capital punish‐ tians. Company ofcials-cum-political theorists in‐ ment, imprisonment, and torture. In fascinating sisted that only their delegated sovereignty stem‐ middle chapters, Stern demonstrates this underly‐ ming from the Crown, and thus ultimately from ing violence inherent in the expansion and de‐ God, could sanctify what was otherwise a sinful fense of territorial sovereignty through examples trade with the infdel. The company fused its trad‐ of the company's wars against Siam and the ing interests with a sense of Protestant mission, , its sustained campaigns to stamp and in places like Bombay the company competed out piracy, and its recurring eforts to put down with Portuguese claims to "spiritual jurisdiction" colonial rebellion or to punish pretenders to com‐ (p. 208). Stern summarizes the view of the compa‐ pany ofces (for instance, the rebellion of Richard ny mission held by Bombay governor Gerald Keigwin in 1683). Aungier and Madras governor Joseph Collett that These were not always stories of the compa‐ establishing a "well-ordered and morally unassail‐ ny's triumph. For instance, the Mughal admiral able Protestant society" as an example to nonbe‐ Sidi Yakub Khan's 1689 invasion of the company's lievers was a crucial part of its sovereignty and colony at Bombay routed company forces and left rule over settler enclaves (p. 112). the frm scrambling to try and secure palatable The company had its own political econo‐ terms of peace. In the cofee houses of London, mists, men like Nathaniel Higginson on the Fort the printed accounts of such disasters were dis‐ St. George council who brought his training in cussed and the terms of company rule debated. classical languages and history to bear on argu‐ Interlopers, constant thorns in the side of the ments for company rule. Stern shows that the late company, consequently took to print to try and seventeenth-century East India Company even shift public opinion to denounce the East India drew on ideas of free trade as a key to its success Company monopoly. against rivals in the East, notably Siam. This early In recent years, historians of the British Em‐ modern notion of free trade was very diferent pire have debated the degree to which events, from the more familiar late eighteenth-century practices, and identities of "metropolitan" Britain version in that these early modern ideas were were shaped by the colonial encounter and colo‐ compatible with company rule. In deploying its nial rule. Stern's study speaks to this question on free trade strategy, the company guarded its right the important level of state formation, portraying as exclusive English sovereign in the East but it as a process entwined with the growth of com‐ strove for low taxes and insisted on the freedom mercial capitalism dependent on overseas trade. of movement for traders throughout its Asian The reverse is also true; events in Britain also sphere. The motive was political and social as shaped the company-state abroad, especially dur‐ much as economic. Trade followed rule. "Free ing the political tumult of the 1680s through trade" in this early modern sense would be the 1710s. lure to encourage immigration to the company's

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Stern argues that the sovereignty situation of East India Company monopoly and in reforming the East India Company was fundamentally al‐ British imperialism into the liberal-economic tered in the wake of the Glorious Revolution and force it would become in the nineteenth century. the 1707 Act of Union; 1688 established the rules The agents of Fichter's study are the very rich, for Parliament and Crown's power sharing while and the plot centers on their business invest‐ the Act of Union merged the Scottish and English ments, their calculations, the advantages that Parliaments. Among other indignities, the compa‐ wars brought to their business, and their under‐ ny after 1688 had to sufer regular parliamentary standing of wealth and social distinctions and re-appraisals of its charter. This would be the con‐ participation in class formation. The book exam‐ stitutional mechanism through which corporate ines how these very rich transformed oceanic sovereignty would be gradually whittled away trade by developing a business model that fa‐ and reshaped into the national imperialism of the vored highly capitalized (in specie) ventures but nineteenth century. also accommodated lesser traders—all to the But while the mechanisms for parliamentary detriment of East India Company shareholders. review and subordination of the company to the Fichter touches, although he does not focus, British state would have efects down the line, in on the sovereignty question. For instance, he fact the day-to-day matters of state continued to places the impetus for American competition with rest with the company after 1688. In the early the East India Company in the context of debates decades of the eighteenth century, company lead‐ about sovereignty at the outset of the American ers continued in their long game to make the in‐ colonial rebellion of the 1770s. Here he brings a frastructures of company rule self-sustaining. fresh approach to the well-known point that They promoted new settlement plans on Sumatra; many Americans—especially interested mer‐ encouraged religious toleration; sought to imple‐ chants—were hostile to monopolies before the ment impartial justice (and also to be seen as the war for independence. Merchant-patriots con‐ legitimate legal authority in and around its demned the claims of both corporate and monar‐ colonies and factories, insisting that English com‐ chical sovereigns in the regulation of trade. In‐ mon law did not extend to the company's do‐ stead of presenting the anti-monopoly rhetoric as main); and even engaged in public health cam‐ merely an outgrowth of republicanism or as a re‐ paigns. This all was done with the aim to encour‐ sult of Scottish enlightenment critiques of mer‐ age Indian and Chinese settlement in its colonies, cantilism, Fichter shows how merchants' attitudes which was at least partly inspired by the necessity were tied to specifc problems of company rule of providing the settlements with sufcient popu‐ that the Americans confronted in their own trad‐ lation to outft defensive militias. Company eforts ing ventures. Material conditions for these traders bore fruit especially in its new settlement at Cal‐ mattered more than ideology. cutta, which would be the center of its military ex‐ Their criticism of the monopoly refected the pansion after the mid-eighteenth century. Calcutta undeniable truth that the 1780s and 1790s fa‐ grew from a total population of 15,000 in 1704 to vored the large state-chartered monopolies that 120,000 at mid-century, and 200,000 by 1780 (p. could leverage large amounts of capital for ship‐ 183). building and Spanish silver, the "good" preferred Fichter carries the story of trade and empire by Chinese traders. Patriotic American merchants forward into the Age of Revolution at the end of saw the expansion of trade in the East as a desir‐ the eighteenth century. He proposes that the able national goal, yet the American-Asian trade American trade was a main catalyst in ending the was distributed among smaller merchants, none

4 H-Net Reviews with sufcient capital to compete with the larger to ship under their countries' fags in a time of European monopolies. One solution would have war while the neutral Americans swept up easy been to carve a space in the new republic's consti‐ cargoes at Batavia, the Philippines, and the Mas‐ tution for the chartering of corporations and even carene Islands to transport to markets in Europe the granting of monopolies, as some Federalists and the Americas. favored. An American East India Company could So the war helped the American East India thus compete with its British, Dutch, and Russian trade grow. However, Fichter's major contribution counterparts. Though as Fichter shows the anti- is to suggest that this growth and the clear signals monopoly strain in republican thought and late of commercial advantage for American shipping colonial American political culture was strong, in infuenced a change in American capitalism, espe‐ the end the commerce clause of the U.S. Constitu‐ cially in the rise of a fnancial class. Fichter tion would leave matters vague, neither establish‐ sketches a picture of Atlantic-world class hierar‐ ing the power to create monopolies nor outright chy, with his analysis always on the level of signi‐ banning them. fcation of class and the spectacle of conspicuous Fichter describes a boom in American trade consumption. The book highlights the fner points with Asia and links it to the unique sovereignty of wealth's performance in the metropolitan cen‐ predicament facing the East India Company dur‐ ters of the Atlantic world, advancing a notion of ing Britain's war on France from the 1790s social status suggested for the period by historian through the 1810s. British wartime controls on Daniel Vickers.[1] Fichter shows that the English trade hampered the East India Company's ability rich with titles looked down at the new money of to sell abroad, but the independent American the American "afuent" whose lavish coaches and traders were not encumbered by these. During mansions were seen as ostentatious and decadent the war years, American vessels competed with by the merely "competent" traders below them company ships to supply the West Indies and Eu‐ (but still in the wealthiest 1 percent). rope and their own American markets with East Though merchants and investors of the At‐ India goods. Fichter uses customs records to trace lantic upper-upper, middle-upper, and lower-up‐ the comparative rise in the American share of per classes sometimes looked askance at each oth‐ East India trade, but he also employs frst-hand er, they seemed to agree that the American-Asian accounts from participants in the trade to estab‐ trade could do good work for them. The "compe‐ lish their interests and strategic calculations. Us‐ tent" merchant kept low by his ties to bartering ing the correspondence of the American mer‐ communities and therefore a lack of access to suf‐ chant Israel Thorndike, for instance, Fichter fcient silver to purchase or to rent an entire ship shows how American traders found markets dur‐ of his own could turn a proft by investing small ing the French wars even for goods they knew funds to receive a consignment of Asian trade were inferior in quality (sometimes even spoiled) goods aboard a ship owned by one of the rare "af‐ to those of the British East India Company. fuent" American capitalists (p. 114). Fichter ar‐ Fichter's sources paint a picture of American gues that the American model eventually beat the ships moving from port to port in the Caribbean East India Company's archaic practices and se‐ and confronting the changing shape of power as cured for the American traders a larger share of the forces of the French and English and a free trade to the East. Fichter further concludes that Haitian republic contended for economic and mil‐ the example of American trading success was the itary control. In a later chapter, Fichter describes key fact that proved to Britons the inefciency of a similar situation in the Indian Ocean, showing the East India Company's monopoly and led to the the difculties for the Dutch, British, and English

5 H-Net Reviews demise of the company's monopoly right by act of American willingness to build cheap ships while Parliament in 1813. the company, still mired in old corruption, gave The chapter "Merchant Millionaires" is the wasteful shipbuilding contracts to its own compa‐ longest in the book, and Fichter uses it to elabo‐ ny leaders with shipyards. Fichter says the result rate the consignment model and to explore the was that the East India Company was saddled ethical universe of the book's central protagonists with a feet of "overpriced, baroque monstrosi‐ —the afuent and the competent Atlantic-world ties" (p. 245). American traders thrived for not capitalists. Fichter probes into the lives of key having this added overhead cost against their traders and fnanciers, mining especially the pa‐ profts. The Americans also seem to have edged pers and letters of the wealthy Briton Sir Francis their competition by loading and unloading ships Baring and his son Alexander for accounts of in port much faster than the East India Company their own business practices and ethics and for could, which earned savings in port fees. This was their impressions of American attitudes about partly due to the American preference for smaller class, respectability, afuence, and competence. In ships (and thus smaller cargoes to move). Howev‐ a later chapter, "American Capital and Corpora‐ er, Fichter also notes that the Americans "drove tions," Fichter uses case studies of three afuent their men harder in port," though what forms of American merchants and bankers—Stephen Gi‐ labor discipline were employed here is unclear rard, Israel Thorndike, and John Jacob Astor—to (pp. 192-193). This would be an interesting ques‐ demonstrate the scale of new wealth accumula‐ tion to sort out, especially in light of Peter tion and to show how the American model Linebaugh's argument that important innovations evolved beyond consignments and rented cargoes in capital's techniques of work discipline—for in‐ into the form of the American business corpora‐ stance, the use of police to enforce wage labor— tion. Like the East India Company, the American were tried frst against people employed in load‐ corporations of the early decades of the nine‐ ing and unloading ships on the Thames in the teenth century were highly capitalized in specie. 1790s.[2] It also would be interesting to see But unlike the English company, there was no pre‐ whether the American traders were using en‐ tense to a public function for the American corpo‐ slaved labor in U.S. ports. rations; rather, they were purely instruments for Fichter's discussion of the innovations of the organizing capital investments for private gain— American shipping model and the American ef‐ even if sometimes corporate heads believed their ciencies in trade builds toward his fnal point that commercial victories over old-Europe corpora‐ the obvious gains of the Americans inspired tions were patriotic. British free-traders in Parliament in the early Fichter connects the advance of American 1810s to renew their assault on the company mo‐ trade to the demise of the British company mo‐ nopoly. Moreover, the statistics showing the nopoly. Though undoubtedly the greatest key to Americans beating the British company were the American success in contesting the East India most important ammunition in debate in the Company was the prolonged war that favored the press and Parliament over canceling the monop‐ trading stakes of neutrals, Fichter focuses atten‐ oly. The free-trade rhetoric turned on a simple but tion in later chapters on the agency of American forceful argument—liberalizing trade would fnal‐ traders in felling the old monopoly giant. Not the ly confer to private English oversea traders the war alone but the Americans' "superior organiza‐ commercial advantages already enjoyed by the tion" of trade, he argues, determined their success Americans against our decadent monopoly; free (p. 197). One competitive advantage came in the

6 H-Net Reviews trade would be a boon to British commerce and cial feld with cash-cropping peasantries, landless put the empire on frm ground. wage laborers, or enslaved plantation workers Fichter's account of this high politics story is and urban workers, though Fichter does at mo‐ thorough and convincing, focusing especially on ments connect the story of American capitalists to the role of Lord Liverpool in ending the company small-scale cloth manufacturing in India or to the monopoly. But Liverpool's 1813 East India Compa‐ cottage system of New England. This is not to dis‐ ny Act is made to do a bit too much. Did the act re‐ count the very compelling fndings of Fichter's ally confer liberal imperialism, or was liberal im‐ study, but a more straightforward engagement in perialism something that was worked out at low‐ either the introduction or conclusion with studies er levels of colonial government and in local con‐ concerned with social analysis of capitalism and tests earlier?[3] It was, after all, quite common to colonialism would have connected this story of fnd avid readers of Adam Smith inside the com‐ elites to the processes that shaped wider experi‐ pany from the 1780s forward, and these sought to ences of the liberal turn of empire. develop land tenure according to a property mod‐ So what do these two books reveal about An‐ el suited for the further extension of the cash glo-American capitalism in the movement from nexus and the buying and selling of land, mineral the early modern to the modern period in the "At‐ resources, and labor—all essential components to lantic world" and the Indian Ocean? Stern shows the liberal-capitalist order. Though overseas trade us that the development of commercial capitalism regulations were important to the history of the was deeply entwined with eforts to rule abroad. development of liberal imperialism, this trade Modern empire did not emerge out of what had was not the only story.[4] From the vantage point erstwhile been the peaceful activities of mer‐ of the practice of colonial government—for in‐ chants. Instead, from the beginning of Europeans' stance, in the way the company attempted to gov‐ outward movement of exploration and com‐ ern Indian marketplaces in Bihar and Bengal—the merce, company men approached their activities constitutional changes of the 1810s can be seen as as matters of government. But the actions of those confrming what were already entrenched liberal- carrying the banners of English government and governmental practices in the administration of commerce abroad were always corralled by the empire in India.[5] ideas of the time. Company servants innovated Fichter's narrow concern for explaining liber‐ techniques of rule, but they could never stray far al imperialism as ofcial trade policy (rather than from their early modern moorings in European in social terms of relations of labor, land, and cap‐ discourses on government, corporate sovereignty, ital) requires a caveat for the claim in the book's "trafck," and property. However, as Fichter title about the transformation of Anglo-American demonstrates, by the last decades of the eigh‐ capitalism. Capitalism for Fichter does not seem teenth century, recognizably modern notions of to be a system organizing labor relations or an personal and national wealth and international ideology that developed such a system. Rather, competition were eclipsing early modern ideas of the Anglo-American capitalism of the title refects good colonial government and sovereignty. Amer‐ aspects of business strategy and a new sociability ican traders pursued their personal fortunes and among those endowed with money wealth. The sought advancement in terms of class. While changes in capitalism speak to shifts among the some were preoccupied with their patriotic role national elite in which rules and business models in assailing the English monopoly, most under‐ would govern overseas shipping. There is little stood corporations now as divorced from the here about how American traders related in a so‐ functions of public government; the American corporation's singular purpose was not to govern

7 H-Net Reviews but to aggregate private capital, Fichter argues. [4]. Anna Clark and I have discussed this Meanwhile, British free traders cognizant of their point more extensively in Anna Clark and Aaron own social position claimed that their vision of Windel, "The Early Roots of Liberal Imperialism: liberal global commerce would beneft Britons 'The Science of a Legislator' in Eighteenth-Century against American competition. Fichter shows us India," Journal of Colonialism and Colonial Histo‐ that even if theories about government and trade ry 14, no. 2 (2013). continued to matter to the company, war and the [5]. Sudipta Sen, Empire of Free Trade: The invigorated competition it brought from the East India Company and the Making of the Colo‐ Americans signifcantly disrupted company activi‐ nial Marketplace (Philadelphia: University of ties. In the end, these dynamics, external to the Pennsylvania Press, 1998). company itself, played an important role in dis‐ lodging the East India Company from its position as a leading force in the growth of commercial capitalism in the Indian Ocean. Whether this was decisive in determining the turn to liberal imperi‐ alism is still an open question. What is clearly re‐ vealed through Fichter's and Stern's accounts is that by the 1780s the corporation had changed dramatically, and so did the dominant discourses that shaped and explained its rationalities of rule. Corporations had gone from being entwined with the early modern state, including its religious moorings, to by the 1780s being thought of as wholly separate formations from government and with proft alone as a legitimate goal. Notes [1]. Daniel Vickers, "Competency and Compe‐ tition: Economic Culture in Early America," The William and Mary Quarterly 47, no. 1 (1990): 3-29. [2]. Peter Linebaugh, The London Hanged: Crime and Civil Society in the Eighteenth Century (London: Verso, 2003), especially the fnal chapter "Sugar and Police: The London Working Class in the 1790s." [3]. Jon E. Wilson has recently argued, for in‐ stance, that abstract, liberal principles of colonial government emerged in Bengal through company servants' and governors' eforts to impose a co‐ herent order against what they saw as chaotic In‐ dian practices and resistance to rule. Jon E. Wil‐ son, The Domination of Strangers: Modern Gover‐ nance in Eastern India, 1780–1835 (London: Pal‐ grave Macmillan, 2008).

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Citation: Aaron Windel. Review of Fichter, James R. So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism. ; Stern, Philip J. The Company-State: Corporate Sovereignty and the Early Modern Foundations of the British Empire in India. H-Business, H-Net Reviews. December, 2014.

URL: https://www.h-net.org/reviews/showrev.php?id=42151

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