Windel on Fichter, 'So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism' and Stern, 'The Company-State: Corporate Sovereignty and the Early Modern Foundations of the British Empire in India'

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. $65.00 (cloth), ISBN 978-0-19-539373-6; $27.95 (paper), ISBN 978-0-19-993036-4.

Reviewed by Aaron Windel (Department of History, Simon Fraser University)
Published on H-Business (December, 2014)
Commissioned by Tracey Deutsch

From Company-State to Liberal Empire: Reframing the Rise and Demise of the British East India Company Monopoly, 1600-1815

How corporate capitalism came to dominate social relations and to exert new influences and controls over the conduct of populations in the global South remains an unsettled and urgent historical problem. Two recent books explore the place of the early modern corporation in shaping the trajectories of commercial and plantation capitalism and also reveal much about Atlantic-world and Indian Ocean political thought and national and imperial state formation. Philip J. Stern's The Company State: Corporate Sovereignty and the Early Modern Foundations of the British Empire in India examines the early modern East India Company as an imperial sovereign legible through theories and practices of early modern statecraft. James R. Fichter's So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism explores how early U.S. trade to Asia shaped early American capitalism and influenced Britain's mode of imperial rule.

Their concerns and methods differ. Stern is much more interested in pinning down historically specific meanings of sovereignty and in discussing the application of company-state power. Fichter is less interested in questions of theory and political economy and instead focuses on class formation to track the rise of an American financial elite and to measure its influence in shaping free trade politics in Britain and over the Atlantic and Indian oceans. He wants to understand how wealthy American traders competed with the East India Company during its decline in the late eighteenth and early nineteenth centuries. Taken together these books trace a period from roughly 1600 to 1815, from the rise of the East India Company to its subsequent military-settler occupation and rule at key ports in the Indian Ocean, and finally to its eventual absorption into the liberal nation-state empire that dominated the nineteenth century.

Both Stern and Fichter explore the East India trade for what it tells us about the wider shape of "Atlantic world" political thought, exchange, and imperial government. Fichter surveys a shorter and later time frame than Stern over a wider space—anywhere the Americans searched for opportunities to enhance their trade in the Pacific, Atlantic, and Indian oceans, or the China Sea. His analysis emphasizes high politics and the very rich—the 1 percent in fact (Fichter, p. 111). Stern's study of the seventeenth- and eighteenth-century English East India Company encompasses the smaller area of the eastern Atlantic and mostly coastal zones in the Indian Ocean east of the Cape of Good Hope and extending to Indonesia. He roots the East India Company in early modern ideas about corporate sovereignty.

Stern's book has much to teach us about the role of the corporation in early modern political thought. As it turns out, corporations are not just people, but almost demi-kings. Company leaders to be sure were intent on profiting from trade with Asia, but they also thought of themselves as delegated sovereigns in the East and wore many of the habits of the absolutist states of Europe. They derived their rationale of rule from the same sources of political theory as the English kings. Importantly, this included connection to organized religion. Their "traffick" in trade goods was part of their Protestant mission (Stern, p. 112).

Stern's study brings important new insights to bear on the question of how European imperial states emerged, how they ruled territory and subjects, and how colonial power related to sources of authority in Europe and Britain. Crucially, he blurs the distinction between a trading company and a state. Stern's most important contribution to debates on early modern commerce and empire is to show that to trade in the period was in fact to administer a state. Stern relies on company records (especially the more qualitative aspects—correspondence, legal opinions, etc.) and court cases to show that company authorities throughout the seventeenth and eighteenth centuries explained their activities as building up spiritual and intellectual foundations for self-sustaining infrastructures of colonial government.

Central to his argument are his efforts to recover specific early modern meanings of sovereignty and to understand the East India Company within this matrix. To do so, he explores a less frequently seen thread in early modern political thought concerning sovereignty in the corporation. The corporation—whether in the form of a chartered company like the East India Company or a municipality in England (as in the incorporated City of London)—opened a space for government outside the ambit of Crown and Parliament. The East India Company attempted to fill this space east of the Cape of Good Hope.

The company’s sovereignty was precarious. Corporate authority was challenged by interlopers (unlicensed traders), pirates, rebels, and rival rulers. Sometimes to defend its constitutional position or the security of its vulnerable colonies, the company had to appeal to the English Crown, depending on it for effective rule. Company sovereignty also was derived from—and thus limited by—Asian rulers from whom the company had received grants and signed treaties. To company leaders, Stern notes, a Mughal imperial farman was as crucial as its charters from the English Crown for giving force to its jurisdictional claims. None of this, however diminished the conviction among company leaders that they were the true captains at the helm of English government in the East.

Company sovereignty rested on religion as well as politics, linked to early modern theories of sin and indulgence that regulated a Christian kingdom's commercial interaction with non-Christians. Company officials-cum-political theorists insisted that only their delegated sovereignty stemming from the Crown, and thus ultimately from God, could sanctify what was otherwise a sinful trade with the infidel. The company fused its trading interests with a sense of Protestant mission, and in places like Bombay the company competed with Portuguese claims to "spiritual jurisdiction" (p. 208). Stern summarizes the view of the company mission held by Bombay governor Gerald Aungier and Madras governor Joseph Collett that establishing a "well-ordered and morally unassailable Protestant society" as an example to nonbelievers was a crucial part of its sovereignty and rule over settler enclaves (p. 112).

The company had its own political economists, men like Nathaniel Higginson on the Fort St. George council who brought his training in classical languages and history to bear on arguments for company rule. Stern shows that the late seventeenth-century East India Company even drew on ideas of free trade as a key to its success against rivals in the East, notably Siam. This early modern notion of free trade was very different from the more familiar late eighteenth-century version in that these early modern ideas were compatible with company rule. In deploying its free trade strategy, the company guarded its right as exclusive English sovereign in the East but strove for low taxes and insisted on the freedom of movement for traders throughout its Asian sphere. The motive was political and social as much as economic. Trade followed rule. "Free trade" in this early modern sense would be the lure to encourage immigration to the company's settlements, as company officials hoped, "as naturally as Crowes resort to carrion" (p. 85).

The violence of the company-state is as important to Stern's account as the intellectual discourse that the company relied on to explain its right to rule. Rights claims had to be backed up by the waging of war and by the routine use of company-state violence in the form of capital punishment, imprisonment, and torture. In fascinating middle chapters, Stern demonstrates this underlying violence inherent in the expansion and defense of territorial sovereignty through examples of the company's wars against Siam and the Mughal Empire, its sustained campaigns to stamp out piracy, and its recurring efforts to put down colonial rebellion or to punish pretenders to company offices (for instance, the rebellion of Richard Keigwin in 1683).

These were not always stories of the company's triumph. For instance, the Mughal admiral Sidi Yakub Khan's 1689 invasion of the company's colony at Bombay routed company forces and left the firm scrambling to try and secure palatable terms of peace. In the coffee houses of London, the printed accounts of such disasters were discussed and the terms of company rule debated. Interlopers, constant thorns in the side of the company, consequently took to print to try and shift public opinion to denounce the East India Company monopoly.

In recent years, historians of the British Empire have debated the degree to which events, practices, and identities of "metropolitan" Britain were shaped by the colonial encounter and colonial rule. Stern's study speaks to this question on the important level of state formation, portraying it as a process entwined with the growth of commercial capitalism dependent on overseas trade. The reverse is also true; events in Britain also shaped the company-state abroad, especially during the political tumult of the 1680s through 1710s.

Stern argues that the sovereignty situation of the East India Company was fundamentally altered in the wake of the Glorious Revolution and the 1707 Act of Union; 1688 established the rules for Parliament and Crown's power sharing while the Act of Union merged the Scottish and English Parliaments. Among other indignities, the company after 1688 had to suffer regular parliamentary re-appraisals of its charter. This would be the constitutional mechanism through which corporate sovereignty would be gradually whittled away and reshaped into the national imperialism of the nineteenth century.

But while the mechanisms for parliamentary review and subordination of the company to the British state would have effects down the line, in fact the day-to-day matters of state continued to rest with the company after 1688. In the early decades of the eighteenth century, company leaders continued in their long game to make the infrastructures of company rule self-sustaining. They promoted new settlement plans on Sumatra; encouraged religious toleration; sought to implement impartial justice (and also to be seen as the legitimate legal authority in and around its colonies and factories, insisting that English common law did not extend to the company's domain); and even engaged in public health campaigns. This all was done with the aim to encourage Indian and Chinese settlement in its colonies, which was at least partly inspired by the necessity of providing the settlements with sufficient population to outfit defensive militias. Company efforts bore fruit especially in its new settlement at Calcutta, which would be the center of its military expansion after the mid-eighteenth century. Calcutta grew from a total population of 15,000 in 1704 to 120,000 at mid-century, and 200,000 by 1780 (p. 183).

Fichter carries the story of trade and empire forward into the Age of Revolution at the end of the eighteenth century. He proposes that the American trade was a main catalyst in ending the East India Company monopoly and in reforming British imperialism into the liberal-economic force it would become in the nineteenth century. The agents of Fichter's study are the very rich, and the plot centers on their business investments, their calculations, the advantages that wars brought to their business, and their understanding of wealth and social distinctions and participation in class formation. The book examines how these very rich transformed oceanic trade by developing a business model that favored highly capitalized (in specie) ventures but also accommodated lesser traders—all to the detriment of East India Company shareholders.

Fichter touches, although he does not focus, on the sovereignty question. For instance, he places the impetus for American competition with the East India Company in the context of debates about sovereignty at the outset of the American colonial rebellion of the 1770s. Here he brings a fresh approach to the well-known point that many Americans—especially interested merchants—were hostile to monopolies before the war for independence. Merchant-patriots condemned the claims of both corporate and monarchical sovereigns in the regulation of trade. Instead of presenting the anti-monopoly rhetoric as merely an outgrowth of republicanism or as a result of Scottish enlightenment critiques of mercantilism, Fichter shows how merchants' attitudes were tied to specific problems of company rule that the Americans confronted in their own trading ventures. Material conditions for these traders mattered more than ideology.

Their criticism of the monopoly reflected the undeniable truth that the 1780s and 1790s favored the large state-chartered monopolies that could leverage large amounts of capital for shipbuilding and Spanish silver, the "good" preferred by Chinese traders. Patriotic American merchants saw the expansion of trade in the East as a desirable national goal, yet the American-Asian trade was distributed among smaller merchants, none with sufficient capital to compete with the larger European monopolies. One solution would have been to carve a space in the new republic's constitution for the chartering of corporations and even the granting of monopolies, as some Federalists favored. An American East India Company could thus compete with its British, Dutch, and Russian counterparts. Though as Fichter shows the anti-monopoly strain in republican thought and late colonial American political culture was strong, in the end the commerce clause of the U.S. Constitution would leave matters vague, neither establishing the power to create monopolies nor outright banning them.

Fichter describes a boom in American trade with Asia and links it to the unique sovereignty predicament facing the East India Company during Britain's war on France from the 1790s through the 1810s. British wartime controls on trade hampered the East India Company's ability to sell abroad, but the independent American traders were not encumbered by these. During the war years, American vessels competed with company ships to supply the West Indies and Europe and their own American markets with East India goods. Fichter uses customs records to trace the comparative rise in the American share of East India trade, but he also employs first-hand accounts from participants in the trade to establish their interests and strategic calculations. Using the correspondence of the American merchant Israel Thorndike, for instance, Fichter shows how American traders found markets during the French wars even for goods they knew were inferior in quality (sometimes even spoiled) to those of the British East India Company. Fichter's sources paint a picture of American ships moving from port to port in the Caribbean and confronting the changing shape of power as the forces of the French and English and a free Haitian republic contended for economic and military control. In a later chapter, Fichter describes a similar situation in the Indian Ocean, showing the difficulties for the Dutch, British, and English to ship under their countries' flags in a time of war while the neutral Americans swept up easy cargoes at Batavia, the Philippines, and the Mascarene Islands to transport to markets in Europe and the Americas.

So the war helped the American East India trade grow. However, Fichter's major contribution is to suggest that this growth and the clear signals of commercial advantage for American shipping influenced a change in American capitalism, especially in the rise of a financial class. Fichter sketches a picture of Atlantic-world class hierarchy, with his analysis always on the level of signification of class and the spectacle of conspicuous consumption. The book highlights the finer points of wealth's performance in the metropolitan centers of the Atlantic world, advancing a notion of social status suggested for the period by historian Daniel Vickers.[1] Fichter shows that the English rich with titles looked down at the new money of the American "affluent" whose lavish coaches and mansions were seen as ostentatious and decadent by the merely "competent" traders below them (but still in the wealthiest 1 percent).

Though merchants and investors of the Atlantic upper-upper, middle-upper, and lower-upper classes sometimes looked askance at each other, they seemed to agree that the American-Asian trade could do good work for them. The "competent" merchant kept low by his ties to bartering communities and therefore a lack of access to sufficient silver to purchase or to rent an entire ship of his own could turn a profit by investing small funds to receive a consignment of Asian trade goods aboard a ship owned by one of the rare "affluent" American capitalists (p. 114). Fichter argues that the American model eventually beat the East India Company's archaic practices and secured for the American traders a larger share of trade to the East. Fichter further concludes that the example of American trading success was the key fact that proved to Britons the inefficiency of the East India Company's monopoly and led to the demise of the company's monopoly right by act of Parliament in 1813.

The chapter "Merchant Millionaires" is the longest in the book, and Fichter uses it to elaborate the consignment model and to explore the ethical universe of the book's central protagonists—the affluent and the competent Atlantic-world capitalists. Fichter probes into the lives of key traders and financiers, mining especially the papers and letters of the wealthy Briton Sir Francis Baring and his son Alexander for accounts of their own business practices and ethics and for their impressions of American attitudes about class, respectability, affluence, and competence. In a later chapter, "American Capital and Corporations," Fichter uses case studies of three affluent American merchants and bankers—Stephen Girard, Israel Thorndike, and John Jacob Astor—to demonstrate the scale of new wealth accumulation and to show how the American model evolved beyond consignments and rented cargoes into the form of the American business corporation. Like the East India Company, the American corporations of the early decades of the nineteenth century were highly capitalized in specie. But unlike the English company, there was no pretense to a public function for the American corporations; rather, they were purely instruments for organizing capital investments for private gain—even if sometimes corporate heads believed their commercial victories over old-Europe corporations were patriotic.

Fichter connects the advance of American trade to the demise of the British company monopoly. Though undoubtedly the greatest key to American success in contesting the East India Company was the prolonged war that favored the trading stakes of neutrals, Fichter focuses attention in later chapters on the agency of American traders in felling the old monopoly giant. Not the war alone but the Americans' "superior organization" of trade, he argues, determined their success (p. 197). One competitive advantage came in the American willingness to build cheap ships while the company, still mired in old corruption, gave wasteful shipbuilding contracts to its own company leaders with shipyards. Fichter says the result was that the East India Company was saddled with a fleet of "overpriced, baroque monstrosities" (p. 245). American traders thrived for not having this added overhead cost against their profits. The Americans also seem to have edged their competition by loading and unloading ships in port much faster than the East India Company could, which earned savings in port fees. This was partly due to the American preference for smaller ships (and thus smaller cargoes to move). However, Fichter also notes that the Americans "drove their men harder in port," though what forms of labor discipline were employed here is unclear (pp. 192-193). This would be an interesting question to sort out, especially in light of Peter Linebaugh's argument that important innovations in capital's techniques of work discipline—for instance, the use of police to enforce wage labor—were tried first against people employed in loading and unloading ships on the Thames in the 1790s.[2] It also would be interesting to see whether the American traders were using enslaved labor in U.S. ports.

Fichter's discussion of the innovations of the American shipping model and the American efficiencies in trade builds toward his final point that the obvious gains of the Americans inspired British free-traders in Parliament in the early 1810s to renew their assault on the company monopoly. Moreover, the statistics showing the Americans beating the British company were the most important ammunition in debate in the press and Parliament over canceling the monopoly. The free-trade rhetoric turned on a simple but forceful argument—liberalizing trade would finally confer to private English oversea traders the commercial advantages already enjoyed by the Americans against our decadent monopoly; free trade would be a boon to British commerce and put the empire on firm ground.

Fichter's account of this high politics story is thorough and convincing, focusing especially on the role of Lord Liverpool in ending the company monopoly. But Liverpool's 1813 East India Company Act is made to do a bit too much. Did the act really confer liberal imperialism, or was liberal imperialism something that was worked out at lower levels of colonial government and in local contests earlier?[3] It was, after all, quite common to find avid readers of Adam Smith inside the company from the 1780s forward, and these sought to develop land tenure according to a property model suited for the further extension of the cash nexus and the buying and selling of land, mineral resources, and labor—all essential components to the liberal-capitalist order. Though overseas trade regulations were important to the history of the development of liberal imperialism, this trade was not the only story.[4] From the vantage point of the practice of colonial government—for instance, in the way the company attempted to govern Indian marketplaces in Bihar and Bengal—the constitutional changes of the 1810s can be seen as confirming what were already entrenched liberal-governmental practices in the administration of empire in India.[5]

Fichter's narrow concern for explaining liberal imperialism as official trade policy (rather than in social terms of relations of labor, land, and capital) requires a caveat for the claim in the book's title about the transformation of Anglo-American capitalism. Capitalism for Fichter does not seem to be a system organizing labor relations or an ideology that developed such a system. Rather, the Anglo-American capitalism of the title reflects aspects of business strategy and a new sociability among those endowed with money wealth. The changes in capitalism speak to shifts among the national elite in which rules and business models would govern overseas shipping. There is little here about how American traders related in a social field with cash-cropping peasantries, landless wage laborers, or enslaved plantation workers and urban workers, though Fichter does at moments connect the story of American capitalists to small-scale cloth manufacturing in India or to the cottage system of New England. This is not to discount the very compelling findings of Fichter's study, but a more straightforward engagement in either the introduction or conclusion with studies concerned with social analysis of capitalism and colonialism would have connected this story of elites to the processes that shaped wider experiences of the liberal turn of empire.

So what do these two books reveal about Anglo-American capitalism in the movement from the early modern to the modern period in the "Atlantic world" and the Indian Ocean? Stern shows us that the development of commercial capitalism was deeply entwined with efforts to rule abroad. Modern empire did not emerge out of what had erstwhile been the peaceful activities of merchants. Instead, from the beginning of Europeans' outward movement of exploration and commerce, company men approached their activities as matters of government. But the actions of those carrying the banners of English government and commerce abroad were always corralled by the ideas of the time. Company servants innovated techniques of rule, but they could never stray far from their early modern moorings in European discourses on government, corporate sovereignty, "traffick," and property. However, as Fichter demonstrates, by the last decades of the eighteenth century, recognizably modern notions of personal and national wealth and international competition were eclipsing early modern ideas of good colonial government and sovereignty. American traders pursued their personal fortunes and sought advancement in terms of class. While some were preoccupied with their patriotic role in assailing the English monopoly, most understood corporations now as divorced from the functions of public government; the American corporation's singular purpose was not to govern but to aggregate private capital, Fichter argues. Meanwhile, British free traders cognizant of their own social position claimed that their vision of liberal global commerce would benefit Britons against American competition. Fichter shows us that even if theories about government and trade continued to matter to the company, war and the invigorated competition it brought from the Americans significantly disrupted company activities. In the end, these dynamics, external to the company itself, played an important role in dislodging 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 imperialism is still an open question. What is clearly revealed 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 profit alone as a legitimate goal.


[1]. Daniel Vickers, "Competency and Competition: 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 final chapter "Sugar and Police: The London Working Class in the 1790s."

[3]. Jon E. Wilson has recently argued, for instance, that abstract, liberal principles of colonial government emerged in Bengal through company servants' and governors' efforts to impose a coherent order against what they saw as chaotic Indian practices and resistance to rule. Jon E. Wilson, The Domination of Strangers: Modern Governance in Eastern India, 1780–1835 (London: Palgrave Macmillan, 2008). 

[4]. Anna Clark and I have discussed this point more extensively in Anna Clark and Aaron Windel, "The Early Roots of Liberal Imperialism: 'The Science of a Legislator' in Eighteenth-Century India," Journal of Colonialism and Colonial History 14, no. 2 (2013).

[5]. Sudipta Sen, Empire of Free Trade: The East India Company and the Making of the Colonial Marketplace (Philadelphia: University of Pennsylvania Press, 1998).

Printable Version:

Citation: Aaron Windel. Review of Fichter, James R., So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism and 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.

This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.