#9 Understanding Colonialism: The New Globalisation: The Age of Monopoly Global Companies

The Early Monopoly Companies and Colonisation

This blog continues to define the meaning of the new globalisation. The focus remains on the character of the Empire emanating from Europe as they began to colonise the world. The new Empires developed from Europe begin when Spain invaded the Americas in 1492. From that time on, powerful European States invaded, conquered and colonised the entire world right the way through to 1945. In this blog I address how the first colonies were created, and then managed. As I show, the key to understanding this lies largely in the new monopoly companies of the period.

The so-called ‘Age of Discovery' for Europe began when they sailed their boats across the oceans in the early 15th and 16th centuries. First the Spanish and Portuguese began to settle the Americas in the 1500s, followed by the British, the Dutch and the French a century later.

The extraordinarily aggressive enterprise of European discovery and later settlement, and then of ownership of the world, begins in earnest in 1492. We need to bear in mind that at this time very few peoples knew about 'other' peoples and places outside of their immediate experience. The furthest that most Europeans had travelled to was Jerusalem during the Crusades. A few intrepid European and north African travellers had ventured into Asia; but as far as the American continent was concerned, the land and peoples were completely unheard of in Europe until the Spanish arrived. There were no maps, and 'foreign' peoples were exactly that: were they human people like themselves? Questions such as these were put to the Catholic Pope for answers.

The moment of expansion in the 1490s, into northern Mexico and what is today the southern parts of the USA, coincided exactly with the period when Jews and Muslims were being expelled from Spain: a period characterised by heightened religious tensions. The Spanish and Portuguese were already slaving down the north African coast. They brought slaves with them on their arrival in 'New Spain', the territory they conquered, now called Mexico. This period was one of considerable aggression. When the Spanish encountered villages where peoples made a livelihood through hunting and gathering, their superior military technology allowed them to behave with violence that characterised future colonial ventures.

The Pope provided the ultimate justification for 'outrageous atrocity'. In a Papal Bull addressed to the people of Mexico in the 1530s, the ‘Apostles of the sword’ referred to Cortez invading Mexico and Peru:

Yield obedience and subject yourself to the your Lord, without resistance and obey the religious men sent by the king” and if they did not comply he threatened, " I will carry on war with the utmost violence; I will subject you to the subject of the yoke of the church and the king; I will take your wife and children and will make slaves of them; I will seize your goods and do all the mischief in my power to you as rebellious subjects....

The Spanish brought back gold and silver in vast quantities. Avarice for new wealth began in the so-called 'New World' and it presented the possibility of enriching oneself and one’s sovereign. The search for uncontested access to the fabled treasure of the east was alluring to the young and ambitious. And with the breakdown of old ways, new enterprise was possible.

The monopoly companies set up from the 1550s by the British, Dutch and French were designed to explore the world, as well as own, trade, manage and distribute land for settlement. Importantly, they provided cash for governments to fight their wars. The most long-lasting and significant of these companies was the East India Company, created to trade with the "East": the entire Asian continents and islands. African monopoly companies traded slaves, sugar and cotton. American trading companies focused on the Americas. See the appendix at the end of this blog for further details about the creation of monopoly companies.

As France, Holland and England had each set up their own national monopoly companies; this meant that each country’s monopoly company was competing with the others across the world. What emerged was a situation where new privately financed companies were being created with the legal agreement of the nation-state. Their primary purpose was to enrich the investors, and secondarily to provide funds for their nation-state. Each company had to be armed against each other, and in principle they were regulated by the laws of their originating nation.

Each company understood the ethics that lay behind its creation: what we now describe as a zero-sum game, whereby each company’s gain was a loss to the others. Each European nation was competing against each other and each new company was competing against the peoples that they came across. It was these principles that provided the working methods for each monopoly company: not just to exploit whatever and whomever they met, but to destroy them when the circumstances were suitable.

The Principles of the Zero-Sum Game

The principles of engagement that underpin European global behaviour, all the way up to the period to 1945, has been referred to as the ‘zero-sum game’. A zero-sum game is a situation in which one participant’s gain, in this case one monopoly company’s gain, is a loss to the others. During the 17th, 18th and 19th centuries, no one questioned these principles. As the 19th century progressed, efforts were made to mitigate some of the worst excesses of the zero-sum game, and principles of international behaviour became part of European diplomacy. The most aggressive European states developed diplomatic skills, which allowed nations to make agreements and alliances with one another. Often these alliances were 'of convenience' and frequently altered. By the time of the global wars from 1914, the principles of engagement were fundamentally unaltered over these hundreds of years. The first major attempt to change these principles arose as a consequence of the blood-letting, after 1918; the League of Nations was followed after 1945 by The European Union and the United Nations.

The principles of engagement that underpin European global behaviour, all the way up to the period to 1945, has been referred to as the ‘zero-sum game’.  A zero-sum game is a situation in which one participant’s gain, in this case one monopoly company’s gain, is a loss to the others. During the 17th, 18th and 19th centuries, no one questioned these principles. As the 19th century progressed, efforts were made to mitigate some of the worst excesses of the zero-sum game, and principles of international behaviour became part of European diplomacy. The most aggressive European states developed diplomatic skills, which allowed nations to make agreements and alliances with one another. Often these alliances were 'of convenience' and frequently altered. By the time of the global wars from 1914, the principles of engagement were fundamentally unaltered over these hundreds of years. The first major attempt to change these principles arose as a consequence of the blood-letting, after 1918; the League of Nations was followed after 1945 by The European Union and the United Nations.

The so-called National Charter companies were innovative at the time. They were financed from private sources, allowed to arm themselves for protection, and they set out to control the trade they could muster. The East India companies avoided the Ottomans, sailed around the Cape to India, and began to set up local agreements and build forts. Each of the new European companies rapidly discovered that the Indian and Chinese governments did not want to obtain what Europe had to offer, rather they felt themselves to be self-sufficient. On the other hand, the Europeans did want the cotton, silks and precious stones that the Indians had to offer. They were required to pay in gold and silver coin; so most of the early exchange with India was enabled by gains from the invasion of the Americas.

Monopoly and Capital

The early monopoly companies, set up in the early late 1500s and early 1600s, were the precursor of companies through the ages that followed: almost as if monopoly is the natural form of organisation and trade. There have always been great numbers of small and tiny businesses; 21st century economic theory asserts that competition leads to efficiency, but they were not part of this picture. The majority of early European monopoly companies required a Royal charter and began their lives soon after the 1600s; a few lasted into the mid-19th century. As capitalism grew rapidly, so companies consolidated. Many left-wing historians and politicians have examined monopoly companies. Paul Baran and Paul Sweezy's 1966 book of this title successfully illustrated monopoly at the end of the 19th century. Lenin's famous work Imperialism: the Highest Stage of Capitalism documented monopoly before 1914. Since 1945, monopoly and oligopoly have developed rapidly, and with the aid of new technologies now dominate a range of fields.

The early monopoly companies were privately owned businesses, set up by royal charter of the local king or queen. These companies are often hailed as the origin of the Joint Stock Company, which allows individuals to invest in large companies with limited liability: the most usual form of company in the 21st century. The early investors were rich landlords, the landed classes in parliament and wealthy families around the monarchy. Later, employees of the companies made huge fortunes trading, and a new class of wealthy merchants arose through commercial exploitation in India.

These companies were also the origins of the private financial and banking infrastructure, which became centrally important to the state as they were easy to tax. Each of the major powers of the 16th century created organisations to look after their interests. The City of London is an obvious example, and to this day remains deeply influential in government policy decisions. The Dutch, French and British states all still use these core institutions to legitimatise all kinds of banking and trading structures. The contemporary core banking and financial institutions of London, Antwerp and Paris originated at this period; their resources arising out of colonial trade and slavery. So, the early monopoly companies became central to the functioning of the capitalist state. Each company was used as a source of tax, through which the state was able to finance wars and develop technology such as ships and canon. Not surprisingly, therefore, they have been heralded throughout history as huge success stories.

At the time the monopoly companies were created, the state needed funds to fight wars, and was only too willing to provide a charter to the right entrepreneurs. The European states, in the 300 years of this period, were too weak to control much beyond their borders. Each early monopoly company was a law until itself. They always carried arms to protect themselves against each other, and to fight and conquer as and when their captains thought fit. These companies and their ships were in practice little more than royally legitimatised brigands, set to pillage and plunder when the opportunity arose.

Unfortunately, many of these early pirate-like entrepreneurs have been made into national heroes. Ideologically driven perceptions of people like Clive in India or Rhodes in Africa have badly dented serious understanding of what occurred. Contemporary history is catching up to cast a critical lens on this period, but still often fails to grasp the enormity of human destruction that occurred across North and South America or in southern Africa. The evidence has always been there: sophisticated and complex ancient civilisations were destroyed in Mexico and Peru. Terror was spread across the lands, before gross systems of dictatorial authority were set up to enslave and exploit the people who remained and the resources of the land. All of this was led by new European monopoly companies.

In the first part of this system of global looting, in the 16th century, the Spanish and Portuguese had been able to transport vast volumes of gold and silver back to Spain. There were many consequences, not least that in the 16th and 17th centuries gold and silver became the sole form of exchange acceptable to Indian traders. The problem faced by the East Indian companies was that India felt herself self-sufficient and did not require European manufactured goods.

Later, in the early 19th century when the European traders sought to enter the Chinese trade, they found the same response. Both India and China had long ruled themselves and both had developed rural-based industries to a high level of sophistication. Both felt able to refuse Europeans’ manufactures. As we shall see in future blog posts, both empires’ long civilisations were to be destroyed and laid to waste so that Europe could break into their trade and dominate their economies.

The empires in the Americas were cruelly destroyed in the early stages of colonially driven monopoly companies. The situation was not the same in Asia, as the existing economies were more developed than those in the Americas, and the peoples more able to resist aggressive Europeans. But in the end, the Europeans’ superior weapons of war and the discipline of their troops were sufficient to overcome all resistance. The empires of India and China were cruelly destroyed two hundred years later, led by the East Indian Company.

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Appendix: Chartered Monopoly Companies

Groups of European merchants banded together to form and invest in companies that would explore Africa, India, Asia, the Caribbean and North America, all under the patronage of their state. Part of the intention was to create the conditions for private profit and state legitimisation of direct rule 'abroad'.

Austrian:

1719 Imperial Privileged Oriental Company

1722 Ostend Company

1775 Austrian East India Company

English/British:

1407 Company of Merchant Adventurers of London

1552 Bristol Society of Merchant Ventures

1553 Company of Merchant Adventurers to New Lands

1555 Muscovy Company

1577 Spanish Company

1579 Eastland Company

1581 Turkey Company

1588 Morocco Company

1600 East India Company

1604 New River Company

1605 Levant Company

1606 Virginia Company

1606 Plymouth Company

1609 French Company

1610 London and Bristol Company

1616 Somers Isles Company

1618 Guinea Company

1629 Massachusetts Bay Company

1629 Providence Island Company

1635 Courteen Association

1664–1674 Royal West Indian Company

1670 Hudson's Bay Company

1672 Royal African Company

1691 Hollow Sword Blade Company

1693 Greenland Company

British crown charters:

1711 South Sea Company

1752 African Company of Merchants (abolished 1821)

1792 Sierra Leone Company

1824 Van Diemen's Land Company

1825 New Zealand Company

1835 South Australian Company

1840 Fiji Company

1847 Eastern Archipelago Company

1881 British North Borneo Company

1886 Royal Niger Company

1888 Imperial British East Africa Company

1889 British South Africa Company

French:

1625 Compagnie de Saint-Christophe

1627 Company of One Hundred Associates

1664 Compagnie de l'Occident

1717 Mississippi Company (Compagnie du Mississippi)

1635 Compagnie des Îles de l'Amérique

1660 Compagnie de Chine

1664 French East India Company (Compagnie des Indes Orientales)

1664 French West India Company (Compagnie des Indes Occidentales)

German:

1682 Brandenburg African Company

1752 Emden Company

1882 German New Guinea Company

1884 German East Africa Company

1885 German West African Company

1891 Astrolabe Company

Portuguese:

1482 Companhia da Guiné

1628 Portuguese East India Company

1888 Companhia de Moçambique

1891 Companhia do Niassa

The Netherlands:

1599-1602 Brabantsche Compagnie

1602–1799 Dutch East India Company (VOC)

1614 New Netherland Company

1614–1642 Noordsche Compagnie (Nordic Company)

1621–1792 Dutch West India Company

1720 Society of Berbice

1841 Compagnie belge de colonisation

This process of enterprise began in the 1553 with the Company of Merchant Adventurers followed shortly by the Muscovy Company to trade with Moscow.

Then in 1600 a slew of companies was created, The East India Company followed by The Virginia Company, Plymouth Company, Massachusetts Bay Company, Providence Island Company, to trade on the East Coast of North America, over the following three decades.

At the same time, French Chartered companies arose; in the following 70 years of the 16th century, the Hudson Bay Company and the Royal African to trade in slaves

There was a break of roughly 100 years before new Chartered companies were established in the 19th century, including the South Australian Company and the New Zealand companies in 1834 and 39.

Then again at the end of the century as Britain's colonies in Africa developed so The Royal Niger Company, The British East Africa Company, and British South Africa's Company were given Royal Chartered status. Throughout the period, private initiative and profit and national government benefits went hand in hand.

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