A Short Account of the History of the Corporation: PART 2 (The Emergence of (Slave) Trade Empires)

Previously, we looked at important business concepts that developed in early recorded history up through the Roman Empire and the rise of the Church and into the 12th century with the formation of merchant organizations in Europe. Next we will take a brief look at the continued evolution of the business enterprise in the 16th and 17th centuries with the rise of vast trading empires. Of particular importance, we will see that with the corporation's great increase in power built in large part through the slave trade or through the trade of goods produced by slaves, the lack of a legal framework to combat these moral and social failures resulted in public protests and consumer boycotts to change business behavior.

The 16th and 17th centuries witnessed the emergence of chartered trade-oriented enterprises that were multinational in character with operations in various territories -- these were the first multi-national corporations. Such widely known institutions as the Dutch East India Company, the British South Africa Company, the Hudson’s Bay Company, and many other corporations representing various regions of the world were founded. Here's one example -- incorporated in England in 1670 and subsequently playing a vital role in the development of Canada, the Hudson’s Bay Company is still in operation today, now focusing its business pursuits primarily in home merchandise and apparel. Further displaying the multinational quality of these potentially immortal entities, the English East India Company at the height of its power extended out to as far as Hong Kong, “covering a fifth of the world’s population.”

A great deal of this early international business growth came from the slave trade industry or in the trade of goods produced by slaves. With the rise of corporate power and abuse came calls for responsibility to public interests and the first recorded public backlash to corporate misbehavior. Aside from striving for fairness with business partners, ethics, practically speaking, were not a part of the equation for these early multinational corporations. Further, government regulation was virtually non-existent. Indeed, the only real legal restraint on the corporation at this time was defined by implication of the purpose of its charter. So, as in one case involving the corporate chartering of land, the corporation was thereby limited to the duty of renting land and “not to any other.” But this mechanism proved insufficient in regulating business. In fact, this policy resulted in giving to corporations expansive freedoms to operate as they saw fit.

Not only were corporations given great license to operate freely within its chartered purpose, which continuously resulted in corporate abuses, in many cases the charters themselves were unethical to begin with. In addition to its struggles with France, inflation was another major concern for Queen Elizabeth’s 16th Century England. One of the primary drivers of inflation was Spain’s access to large quantities of bullion from the Americas. One consequence of Spain’s gold rush was the great loss of life of native inhabitants perishing from germs carried by Spanish soldiers and traders; the natives also perished by organized genocide. Consequently, Spain turned to the continent of Africa for a source of forced labor. Spain initially began transporting over 800 African slaves a year to the Americas, but by the end of the 16th century, over ‘70,000 captives had been shipped across the Atlantic.’ To counter Spain’s economic exploits, many Protestant hard-liners saw the slave trade as a way for England to regain its footing against its Catholic nemesis.

In response, the Protestant English Crown shifted its economic policy by adopting slave trading, making the Queen the first monarch in England to charter a slave trader. John Hawkyns became the first Englishman to be chartered to operate in the “triangular trade market,” a three-way trading system where England brought goods to the African continent to be sold, then loaded the ship with slaves to be taken to the Americas, and finally brought back commodities from the Americas to England. While Spain attempted to control the slave trade, even sanctioning that no more than 4,000 slaves could be transported from 1562 to 1568, England’s clandestine slave operation through Hawkins enabled it to transport 2,000 slaves during that same period. Elizabeth would deploy 2 naval ships to assist Hawkins’ slave hunting enterprise, and would further employ political measures to protect Hawkyns’ operation from the demands of Spain and Portugal, rival powers infuriated by English infiltrations into Africa.

With the state in bed with business, and both participating in a profit-driven genocide of unimaginable proportions, responsible citizens eventually turned to public protests and boycotts. The first known consumer boycott was launched in 1790 in England by Elizabeth Heyrick. Organizing her efforts in Leicester and urging others to refrain from purchasing “blood-stained” sugar from the West Indies, the East India Company would be forced to change its distribution operation, from there on supplying “sugar from slave-less sugar producers.” Not until 1834 would legislation finally be introduced in England abolishing slavery “across the British Empire.”

Some public outcries have not been vocal enough: by 1888 the British South Africa Company and its subsidiary operation De Beers controlled 90% of the world’s diamond production. To this day De Beers holds a monopoly of the diamond market, an industry that continues to be widely criticized for unjust business practices in the continent of Africa.

Next, we will look at the rise of the business corporation in early America.

Peace

Jeremy