Abstract
As a historical sociologist, I found this study, appropriately subtitled “The Corporations That Built British Colonialism,” quite interesting. In it, the historian Philip Stern offers a sweeping summary covering several centuries of how corporations played a key role in the creation of the British Empire. After a brief introduction, Stern looks at long-term legal developments that go back centuries, from the initial public offerings during the Age of Discovery (chapter one) to the increased presence of the state ultimately limiting liabilities in the Age of Imperialism (chapter six). In between, he also examines the significance of municipal bonds from the 17th century onwards (called the Age of Crisis), with a specific focus on joint stock colonization in Ireland as well as the New World in chapter two, the growing influence of corporate finance (called the Age of Projects) in chapter three, the emergence of hostile takeovers (called the Age of Revolutions) in chapter four, and the significance of corporate innovations (called The Age of Reform) in chapter five.
Through his case studies and multiple examples, Stern questions the oft-simplified metanarratives and classifications of mercantilism versus capitalism, or more broadly, the state versus the market. As such, his book provocatively attempts to offer a “new history of British colonialism” in which “venture colonialism” and corporations play a prominent role, moving beyond “traditional imperial history” (p. 12). The emergence of joint stock companies is interpreted here as crucial to the development of colonial expansion and the growth of corporations with their “outsize power that states not always control” (p. 6) leading to something he calls “corporate colonialism” and, at times, “joint stock venture colonialism” (p. 95). Many readers will undoubtedly have heard of the Merchant Adventurers, the Hudson’s Bay Company, and the East Indian Company, but Stern references a large multitude of companies, corporations, and societies, all of which are listed in a special index at the end of the book.
Although not a study in prosopography of the United Kingdom (or English society), the volume raises important issues about how early modern as well as modern elites grafted themselves onto power structures, how money and politics become gradually more intertwined over time, and how companies often led by former government officials and military experts (and tolerated if not legally encouraged by government officials) contributed to the gradual expansion of the Empire (and the subsequent exploitation of colonized lands) since much of England’s mercantile elite was involved in East India Company leadership as well as commercial projects in new England (p. 97). It implicitly, more than explicitly, forces the reader to raise questions about the extent that plunder (p. 40) and colonial exploitation (e.g. hut taxes, extraction of natural resources; p. 292) are intrinsically interlinked with the subsequent seeding and reinvesting of similar commercial activities and schemes. It also emphasizes the long run of commercial and capitalist expansion and how important monopolies are to this entire process (though the extent of the author’s inspiration by Fernand Braudel remains unclear, see the following paragraphs). Whereas in the early modern period, it was blatant how overseas corporations were “political chameleons” (p. 48), given the crucial need to obtain charters; the subsequent centuries also point to an intertwining of merchant/capitalist elites and state power (p. 104), not unlike the revolving door of contemporary bankers and asset managers into the high offices of government agencies in both the UK and the USA. How the Bank of England and the East India Company became intertwined “like fiscal departments of governments” (p. 131) and became “too big to fail” (p. 177) raises, albeit in the footnotes, similar questions about how the Federal Reserve Bank and the US government have provided creditworthiness to a variety of private financial institutions bailed out during the crisis of 2008 and still considered too large to fail. As Stern points out, “one quarter of the House members that were East India Company stock owners dominated the India debates in the Commons” (p. 175), so it was no wonder they had begun to consider the government as a mere appendage to their own affairs, leading Adam Smith to comment that “the government of an exclusive company of merchants is perhaps the worst of all governments” (p. 181).
But Stern also deftly demonstrates that the creation of companies and joint stock towns in the New World was key to the legal “dispossession of indigenous territories” (p. 101) and refers to racialized arguments (p. 297) that often claimed liberal political economy and free trade were fine for Europe but not elsewhere, and therefore, European corporations should be allowed to have monopolies there (p. 199). He also demonstrates how private investors often depict the government as “too slow, too uninterested, too distracted, too fickle” (p. 239), arguments they in turn use to suggest the government should allow for-profit companies and a variety of subsidiary companies, “driven by expert middle-class energy and intelligence” (p. 249), to engage in colonization abroad. And yet, these companies could not have operated without the backing of the state (p. 200; p. 258) because if things did not go according to plan, the government was often expected to step in and buy out the investors altogether, something that occurs well into the early 20th century (p. 304; p. 308). So, while a lot of colonial expansion was undertaken by private initiative (p. 241), corporations became “legitimate actors in international law capable of acquiring alienable forms of indigenous sovereignty” (p. 275), and its wealthy investors remained limited in their liability (p. 263). In such an arrangement, there are potential losses for the state and its taxpayers, whereas potential windfall profits remain private. Perhaps the most egregious example mentioned was not a British one, but that of the Belgian Congo Free State, a “colony run by a corporation whose single shareholder was an unincorporated philanthropic organization, which in turn was the sole personal property of King Leopold II” (p. 275) who only sold his property to the Belgian government just before his demise.
To what extent does the British model of imperialism differ from that of other countries? Stern does not tell us as he only focuses on the British case, but he mentions a few cases in passing such as the Japanese South Manchuria Company and the American United Fruit Company (p. 310). His study is certainly an invitation to historians in other countries to rethink their own imperial narratives of expansionism. That said, he does seem to suggest that there was nothing teleological about the British case: King James wanted to emulate the Spanish model and “do away with corporate independence” (p. 116), but once the Dutchman William of Orange seized power during the Glorious Revolution (1688–1689), it was clear that the corporate model was here to stay, and rather than evolving to an absolute monarchy, a constitutional monarchy influenced by Whig politicians would give its merchant elite even more power (p. 121). This ultimately unleashed a “financial revolution” in the early 18th century (p. 131), leading to the South Sea Bubble and ever more land bank schemes (p. 152).
The last chapter of the book ends with Cecil Rhodes’ activities in South Africa. For reasons unclear to this reviewer, the book ends at a moment when the British Empire is at its zenith. Although intellectual dissenters such as John Hobson are mentioned, it is clear that the history of ideas about the expansion of Empire (or the interpretation of its nature) is not of much interest to the author, which is a pity though of course one cannot put everything in a single tome. Stern’s study certainly raises a number of implicit questions about how social scientists should come to terms with a variety of isms: capitalism, colonialism, and so on. It also raises important implicit questions about the present: To what extent has the power of corporations only grown, even after the formal collapse of imperial rule? As such, it is worthwhile reading to anyone interested in these issues. If there was anything that slightly displeased this reviewer, it was the book’s brief introduction and epilogue as it is unclear how Stern situates himself vis-à-vis other studies, historical traditions, or theoretical perspectives. The concepts he briefly introduces (e.g. “corporate colonialism” and “joint stock venture colonialism” or even “adventure capitalism”) are not really defined or explicated, nor does he engage other historians, such as Braudel, on the significance of monopolies in the formation of capitalism. At the very end, Stern mentions a few late 20th-century examples of how the names of certain corporations live on (such as DeBeers or the Hudson’s Bay Company), but he says little about neocolonialism or the private empires of oil and tobacco (p. 215) in the remaining pages of the book that ends with the Falklands War over one of Britain’s last remaining colonial possessions and not, for example, with how private companies and their asset managers have created a form of rentier capitalism in the UK itself. Historians often dislike writing about the contemporary consequences of their analyses as well as the theoretical implications of their work, and in that sense, Stern is not an exception, which is somewhat unfortunate. If he would have incorporated these concerns more, it would have made a great book, not only terrific but also a must read for a much larger audience than fellow academics. One can only hope that in a future book, he will move more in this direction.