Merchant Kings: When Companies Ruled the World, 1600-1900

Stephen R. Brown
St. Martin’s Press
ISBN: 0312616112
A Review by Francesca Trivellato

In the wake of the 2008 global financial crisis, trust in untamed free markets has vanished. Debates today center on how much and what kind of government regulation of financial markets is needed. The stories Stephen Brown tells in Merchant Kings remind us that European governments have long tangled in business. Indeed, that involvement was almost never benign, and free markets, in the way we’ve become used to imagining them, rarely existed. The history of European capitalism is not only the byproduct of competition among free agents, but is also inseparable from the quest for domination over people as much as natural resources – a quest that was achieved by means of violence and monopoly.

“Merchant kings” may appear an oxymoron, but is an apt expression to describe the protagonists of the European commercial and territorial conquests between 1600 and 1900 that Brown portrays in this highly readable book: They are the men who started out as leaders of commercial companies aiming to open up new markets far from home and “ended up with dictatorial power over millions of people.” In order of appearance, they are Jan Pierterszoon Coen, who charted the Dutch East India Company’s expansion in South East Asia; Pieter Stuyvesant, who established the Dutch West India Company rule in New England; Sir Robert Clive, who led the English East India Company to create firm territorial control over Bengal; Aleksandr Baranov, who spearheaded the initiative of the Russian American Company in Alaska; Sir George Simpson, head of the Hudson’s Bay Company in its most lucrative years; and, finally, Cecil John Rhodes, the lone leader of the British South Africa Company, which gave birth both to De Beers, the diamond giant, and the colonial nation-state of South Africa.

“The merchant kings were monopolists, not capitalists,” Brown writes, they “were abhorrent to free-market thinking like Adam Smith.” From the start, they sought their respective government’s support to facilitate their explorations and advance their economic privileges. That they actually obtained government support for their overseas enterprises is the unacknowledged aspect of European exceptionalism in the story. The native inhabitants of the Banda Islands, in the Indonesian archipelago, are said to have disliked all white men, and the Dutch in particular, because they felt forced into a monopolistic deal requiring that they sell all their spices to one collective buyer. “They much preferred Chinese, Arab and Javanese traders,” who bought and sold a variety of goods in the region. The reason: “They shared cultures with these peoples, and sometimes religion.” 

But culture and religion were not the only things that non-Europeans in South East Asia had in common. They had never seen a political authority so involved in backing the commercial activities of overseas merchants. Although the degree of free trade in the Indian Ocean has been idealized, there’s no doubt that European states, especially the Dutch and British, lent their partisan and unconditional support to “merchant kings” in ways that, say, the Ottoman Sultan or the Chinese Emperor did not. The horrific outcome of European colonialism is as much part of this alliance of trade and politics as is the more heroic version of European commercial entrepreneurship.

Brown is at his best in conjuring personalities and recreating the challenges that merchant kings faced, the hardships endured and the dirty deals devised. In his words, merchant kings single-handedly changed the course of world history “as significantly as the most celebrated military generals, political leaders and technological innovators did.” However, Brown has no deep sympathy for them and has particularly harsh words for Cecil Rhodes, described as “arrogant, racist and insufferably smug.” While he recognizes their moral failures, he admires some traits of his protagonists: “None of them were born into wealth, social status or power, but the struggle to win the contest, as they perceived it, was of paramount concern. The merchant kings were also tactically brilliant and possessed an expansive vision that directed the activities of millions.”

Summarizing the lessons we might learn from this historical narrative of European overseas expansion, Brown concludes that “the ultimate objectives of government and commerce were shown to be inherently incompatible.” And yet his own narrative is proof that government and politics have been inextricably linked in the course of European history. Only to the extent that he adopts a narrow biographical focus, which indicts the wrongdoings of corrupt individuals and fails to account for larger contexts that determined government’s participation in business, can Brown contemplate the existence of genuinely free markets.

Structural changes that transcended the role of the individual and demand more complex explanations influenced the individual destinies of merchant kings and the fortunes of the commercial companies those men headed. The Dutch East India Company is said to have “crumbled on its own faulty foundation.” The Hudson’s Bay Company is said to “had become an embarrassing anachronism” by mid-nineteenth century because “The idea of monopoly had fallen out of favour.” These, among others, are precisely the structural changes that a scholarly inquiry of the past would have to address. I realize that this is the criticism of an academic historian at a time when it’s more common for journalists and writers to review the works of scholars than the opposite. That said, the biographies sketched in Merchant Kings capture the essence of an era when “monolithic corporate entities were less the product of free-market capitalism than the commercial extension of European national wars and struggles for cultural and economic supremacy.”

In the end, the moral of this book is both modest and sensible: the catastrophes created by excessive monopolies in the past should warn us against letting corporations and banks grow today to the point that they are “too big to fail.”

The history of European capitalism is not only the byproduct of competition among free agents, but is also inseparable from the quest for domination over people as much as natural resources – a quest that was achieved by means of violence and monopoly.
Copyright © 2011 Yale Center for the Study of Globalization