Merchant Kings Read online

  Merchant kings

  Stephen R. Bown

  MERCHANT

  KINGS

  Copyright © 2009 by Stephen R. Brown

  09 10 11 12 13 5 4 3 2 1

  All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, without the prior written consent of the publisher or a licence from The Canadian Copyright Licensing Agency (Access Copyright). For a copyright licence, visit www.accesscopyright.ca or call toll free to 1-800-893-5777

  Douglas & McIntyre

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  Library and Archives Canada Cataloguing in Publication

  Bown, Stephen R

  Merchant kings : when companies ruled the world, 1600-1900 /Stephen R. Bown. Includes bibliographical references and indexes.

  ISBN 978-1-55365-342-4

  1. Colonial companies—History. 2.Merchants—Europe—Biography.

  3 . Europe—Commerce—History. 4 . Monopolies— Europe—History.

  5. Monopolies—History. 6. International business enterprises—History.

  7. International trade— History. 1. Title

  HF481.B72 2009 382.09 C2009-902939-1

  Editing by John Ecrkcs-Mcdrano Copy editing by Michael Mundhcnk Jacket and text design by Naomi MacDougall Maps by Eric Leinbergcr Jacket illustration © Marv Evans Picture Library All other illustrations public domain, courtesy of the author

  Printed and bound in Canada bv Friesens Printed on acid-free paper that is forest friendly (100% post-consumer recycled paper) and has been processed chlorine free or printed on paper that comes from sustainable forests managed under the Forest Stewardship Council Distributed in the U.S. by Publishers Group West.

  We gratefully acknowledge the financial support of the Canada Council for the Arts, the British Columbia Arts Council, the Province of British Columbia through the Book Publishing Tax Credit, and the Government of Canada through the Book Publishing Industry Development Program (BPIDP) for our publishing activities.

  Contents

  Introduction

  THE AGE OF HEROIC COMMERCE

  One

  FIRST AMONG EQUALS

  Jan Pieterszoon Cocn and the Dutch East India Company

  Two

  DIVIDED LOYALTIES

  Pieter Stuyvesant and the Dutch West India Company

  Three

  COMPANIES AT WAR

  Sir Robert Clive and the English East India Company

  Four

  THE LORD OF ALASKA

  Aleksandr Baranov and the Russian American Company

  Five

  EMPIRE OF THE BEAVER

  Sir George Simpson and the Hudson's Bay Company

  Six

  DIAMONDS AND DECEIT

  Cecil John Rhodes and the British South Africa Company

  Epilogue

  WHEN COMPANIES RULED THE WORLD

  Sources

  Selected Bibliography

  Timeline for the Age of Heroic Commerce

  Acknowledgements

  Introduction

  THE AGE OF HEROIC COMMERCE

  "Whosoever commands the trade of the world, commands

  the riches of the world and consequently the world itself."

  SIR WALTER RALEIGH, C. l600

  FROM THE EARLY 1600S TO THE LATE 1800S, MONOPoly trading companies were the unofficial agents of European colonial expansion. They seized control of vast territories and many peoples, acquiring a variety of governmental and military functions in the wake of their commercial success. For European nations, granting monopoly trading rights to these companies was a convenient way of bankrolling the astronomical cost of colonial expansion. This tapping of private capital spurred what became known as the Age of Heroic Commerce. As each of these privileged enterprises grew, it first assumed civil authority over all Europeans in its employment overseas and then expanded this authority by subjugating local peoples. In working towards their political objectives, the merchant trading companies maintained their own police forces and, sometimes, standing armies, and either controlled the local governments or became the sole government of their territories. These territories were managed as business interests, in which people were considered as either employees, customers or competitors. Beginning as traders, the leaders of these companies, "the merchant kings," ended up with dictatorial political power over millions of people. This book is an account of six of these merchant kings and their impact.

  Jan Pieterszoon Coen was the ruthless pioneer of the India Company, a trading enterprise that within decades was in conflict with nearly every maritime world. During his “reign,” the company became the for the wealth of the Netherlands’ golden age by supplying of Europe with exotic spices. “Despair not,” he proclaimed letter to his subordinates in 1618. “Spare your enemies God is with us.” Sometimes his enemies were his when they did not want to trade with his agents or wares of his rivals, the English or the Portuguese, his company’s troops to attack. He tolerated neither nor challenges to his authority.

  The one-legged Pieter Stuyvesant was the autocratic of the Dutch West India Company’s colony For decades he resisted all attempts by the increasing of non-employee citizens of the expanding colony responsible government. Stuyvesant ultimately placed interests ahead of those of his country, an resulted in the loss of the entire territory of New to a foreign power. When during the third Anglo-British war ships anchored off Manhattan offered of New Netherland civil government if they surrendered, entire militia laid down their arms without firing

  Despite having no formal training, Clive was a military genius who transformed the company's fortunes with a series of astonishing military victories, using company troops, over the French East India Company and various local rulers in India during the dying days of the Mughal Empire. He created the foundation for the English East India Company's wealth and political power-after Clive s work, the company was both a monopoly trading enterprise and a civil and taxation authority ruling over thirty million people. Clive later was made a baron and became one of the wealthiest men in Britain. When, in 1772, he was questioned by Parliament about his possible corruption and the sources of his wealth, he indignantly proclaimed: "I stand astonished at my own moderation."

  Aggressive and efficient, Akksandr Andreyevich Baranov was an itinerant Russian merchant and trader who first migrated east to Siberia, then to Alaska. In 1799 he assumed command of the Russian American Company, a semi-official monopoly colonial trading company chartered by Czar Paul 1. Baranov pushed Russian enterprise and colonization further south along the Alaskan coast, warring both with First Nations and with competing Russian businesses in the name of his company. In 1804, firing from a Russian warship, he bombarded a Tlingit village for days, forcing the Tlingit to accept the authority of the Russian American Company. He died after twenty-seven years of solidifying his country's territorial claims on the frontier and extracting vast quantities of sea otter furs for the company's shareholders and directors in St. Petersburg.

  George btmpson, haughty and impatient, was the financial and structural genius who steered the Hudson's Bay Company to its greatest financial success and territorial dominion in the early nineteenth century. "The Little Emperor," as he was known, was the virtual dictator of a good chunk of North America. Responsible for shipping hundreds of thousands of beaver furs to London every year, he was chauffeured about in his vast fur domain perched in the back of a giant canoe, from where he exhorted his exhausted voyageurs to paddle harder so that he could set speed records-and claim all the credit for himself Soon after he died in l86o, most of Simpson's domain
passed from the Hudson's Bay Company's power and became part of the new nation of Canada.

  Cecil John Rhodes, the British-born South African magnate, politician, businessman and racist promoter colonialism, was the founder of the diamond company In 1889 he secured British government support of the British South Africa Company to operate a territory he created and “allowed” to be named The company was a monopoly trading enterprise granted the right to raise its own private army, regulate and govern while theoretically respecting the Africans. In reality it used its power to enrich its through violent land seizures until 1923, when the company’s charter. Rhodes and the British Company became fabulously rich exploiting southern mineral resources under the pretext of governance. Given the opportunity, Rhodes would have gone turther. All or these stars," he lamented, "these vast worlds that remain out of reach. If I could, I would annex other planets." Whether he wanted to annex them to his country or to his company is not known. From their inconspicuous and unlikely beginnings, these eventual merchant kings faced similar dilemmas after rising to positions of authority in their companies. They were vested with enormous powers by both their companies and their countries, yet there was a clear conflict of interest between advancing the business interests of companies and acting as civil authorities. The merchant kings were monopolists, not capitalists. Their enterprises-occupying that grey zone between political and mercantile power, combining the ruthless tactics of despots with the legal structure of a profit-seeking, shareholder-driven joint stock corporation-were abhorrent to free-market thinkers like Adam Smith. It was a difficult job being both monopoly trader and the civil government, and the temptation to subsume one of these roles under the other is obvious. By making far-reaching decisions according to their conflicted consciences, the merchant kings had a profound influence. Companies are not generally known for having sweeping political control, but in trying to balance the interests of their companies with the interests of their countries, the merchant kings changed history as significantly as the most celebrated military generals, political leaders and technological innovators did.

  The seven deadly sins: Pride, Greed, Moth, Lust, hnvy. Wrath and Gluttony. Each of us is overly familiar with one or more of them at some time in our lives. But for most people, these sins are balanced by the seven virtues: Humility, Charit)', Diligence, Chastity, Kindness, Patience and Temperance. Among the merchant kings in the Age of Heroic Commerce, the seven deadly sins might seem overrepresented-the absolute, unaccountable power they wielded magnified their more unsavoury characteristics-but there was goodness in most of them too. Complex and intriguing characters, they were neither heroes nor angels. As with military and political leaders, they had their character traits amplified by power and success, making them seem larger than lite. Placed in the unique historical setting of societies on the cusp of great upheaval, they seized the opportunities they were given and had an impact on the world as great as that of the most famous monarchs, despots and generals. By transforming commercial trading entities into political entities, and with their feet firmly anchored in both worlds, these men truly fought for their markets.

  Chapter 1

  "Your Honours should know by experience that trade in Asia must be driven and maintained under the protection and favour of Your Honours' own weapons, and that the weapons must be paid for by the profits from the trade; so that we cannot carry on trade without war, nor war without trade." JAN PIETERSZOON COEN. C. 1614

  First among Equals

  JAN PIETERSZOON COEN AND THE

  DUTCH EAST INDIA COMPANY

  THE THIRTEEN HEAVILY ARMED SHIPS SAILED TOWARDS the East Indies' remote Band a Islands in the spring of 1609, after nearly a year's voyage from Amsterdam. The heady, sweet scent of flowering nutmeg trees filled the humid air. The commander of the squadron, one of the largest corporate fleets yet to depart the Netherlands for "the spiceries," was Admiral Pieter Verhoeven (Peter Verhoef), a veteran not of trade and exploration but of combat at sea. He was now employed by the Dutch East India Company, the VOC (Vereenigde Oost-Indische Compagnie), with the objective of securing for his employers the exotic cloves and nutmeg of the Moluccas, as the "Spice Islands" of Indonesia were then known. The admiral commanded more than a thousand fighting men, including a contingent of Japanese mercenaries, and his orders from the "Heeren XVll" (the Lords Seventeen), his powerful corporate directors in the Netherlands, were direct and clear: "We draw your special attention to the islands in which grow the cloves and nutmeg, and we instruct you to strive after winning them for the company either by treaty or by force.” Force was something Verhoef understood well, having earned distinction at the Battle of Gibraltar two years earlier, when Dutch ships virtually wiped out a mighty fleet of Holland’s bitter enemy, Imperial Spain.

  As Verhoef and his fleet neared the principal harbour of Great Banda, the admiral was astonished and annoyed to spy an English ship in the sheltered port. For several years now, the Dutch East India Company had been engaged in a simmering conflict with the traders and merchants of the English East India Company. The two companies, vying for control of the lucrative spice trade in Indonesia, each sought to oust the Portuguese and dominate the trade. Captain William Keeling and his ship, Hector, had been cruising the Banda Islands, the world’s sole source of nutmeg and mace, trying to secure a cargo of spices for the past month. He had struck up a cordial relationship with Dutch traders stationed on the remote and tiny islands, enjoying dinners ashore and tours of the plantations. All the friendliness dissipated, however, with the arrival of Verhoef’s fleet. One of Verhoef ’s first actions to frustrate Keeling’s business was to pay the Bandanese headmen, the orang kaya, to stop trading with the English. Keeling complained that Verhoef treated him and his men “most unkindlye, searching his boate disgracefullye and not suffering him to have any further trade, not to gather in his debts, but with a peremptory command, to be gone.” More ominously, an English sailor employed in the Dutch fleet deserted and informed his countrymen that Verhoef was planning a secret attack on them within weeks.

  Keeling pondered his predicament. “Sixty-two men against a thousand or more could not perform much,” he wrote despondently. Weighing anchor, he took the Hector off to one of the more distant islands, Ai, and began to purchase and load his ship with nutmeg far from the interference of the Dutch. The largest island of the tiny archipelago was called Lonthor, or Great Banda, where several thousand Bandanese tended the largest and most valuable nutmeg plantations. The islands of Neira and Gunung Api were clustered within gunshot of Great Banda. Ai was a little distance to the west, and the smallest of the islands, Run, was farther west. On Great Banda, Verhoef wasted no time in menacing and overawing the islanders, and in enforcing a Dutch company monopoly that excluded all English, Portuguese, Malay and Chinese traders from acquiring a cargo of nutmeg.

  On April 19, Verhoef ordered 250 heavily armed company troops to disembark from the ships and form up on the beach. He then summoned the orang kaya to hear his speech and petition. When they had gathered, under the shade of a great tree, he distributed gifts and ceremoniously unfurled a parchment. He proceeded to read his pronouncement, first in Portuguese and then in Malay. The islanders had broken their promise, Verhoef intoned, “to have trade only with them, who had now traded there six years.” Verhoef pointed across the narrow waterway that separated Lonthor from Neira, and informed them that “to defend themselves and the whole country from the Portugals,” his men would soon begin building a fort and permanent factory on Neira. The orang kaya were as dismayed as Verhoef was determined.

  The trouble stemmed from an incident that had occurred several years earlier. On May 23, 1602, Dutch captain Wolfert Harmenszoon persuaded some of Neira’s chiefs to sign a contract, in Dutch—a language they couldn’t read—granting the Dutch East India Company a monopoly in the nutmeg trade.

  Some, but not all, of the orang kaya had signed the agreement, fearing to offend the merchants and invite violent reprisals if they refus
ed. But since there was no real benefit in reserving all their spice for the Dutch, they had not abided by the agreement— if, indeed, they had ever considered doing so. Now it appeared that the Dutch were taking this document seriously and intending to apply it to all of the nutmeg trade on all the Banda Islands, not just to the region controlled by the signatories.

  The Bandanese lived in a series of interrelated coastal villages on the islands but, unlike others in the Moluccas, had no overall king or chief. Verhoef did not understand the islands’ loose governing structure, nor did he know with whom to deal; he simply wanted to secure a veneer of legality for his conquest. The several hundred orang kaya of Great Banda were stunned and perplexed by Verhoef ’s demands, and their response was evasive and guarded—Neira was a separate island with its own orang kaya. They delayed, requesting more time to deliberate the issue: the fact that they had little control over what Verhoef did across the waterway. But the prospect of a permanent stone fort within gunshot distance of their own harbour boded ill.

  The Bandanese were reminded of a prophecy made a few years earlier by a Muslim holy man that foretold of white strangers from afar who would one day conquer their islands. English traders had mirthfully associated this prophecy with the Dutch. The islanders, however, did not want to be locked into dealing with the Dutch. They much preferred Chinese, Arab and Javanese traders, who were frequently in port, bringing goods the Bandanese valued, such as batiks, calicoes, rice, sago palm, porcelain and medicines. They shared cultures with these peoples, and sometimes religion. The Dutch traders, on the other hand, did not impress with their often useless trade goods, such as woollen and velvet cloth, their strange religion, their irregular visits, ignorance of local customs and inflexible prices. Particularly annoying was Verhoef ’s demand that the islanders stop selling nutmeg and mace to anyone but the Dutch traders. Further unsettling the Bandanese was the eruption of a volcano on nearby Gunung Api. Ominously, the volcano belched a cloud of cinders and ashes onto Neira just as Verhoef ’s fleet arrived.