Hemisphere Inc.

They may indeed be modern, but these aren’t the first companies to sit astride the globe in this way. And if you take the long view, they’re nowhere near the most powerful. For nearly three centuries, starting around 1600, as European states colonized the world, a vast amount of that expansion, exploration, and warmaking was done by private companies.

In his new book, “Merchant Kings: When Companies Ruled the World, 1600-1900,” historical author Stephen R. Bown describes a scale of corporate power that, in the modern era, might seem like a paranoid fantasy: private companies that claimed land, signed treaties, and openly raised armies to attack whoever got in their way. They also made a whole lot of money for their mother- and fatherlands. They included the Dutch East India Company, the Hudson’s Bay Company, Cecil Rhodes’ leviathan DeBeers operation, and many lesser-known outfits like the Russian American Company. They weren’t like modern corporations in every way — most of them were authorized by governments to secure monopolies over trade items and regions — but they were privately run, funded by investors, managed by boards of directors, and driven by profit. The businessmen who ran them were complex, highly ambitious, and sometimes despotic, from the Dutch East India Company’s savage Jan Pieterszoon Coen to George Simpson, the flamboyant Hudson’s Bay Company pioneer who traveled North America’s waterways in a giant canoe.

The image that emerges from Bown’s book is that these companies were, essentially, a way for nation states to outsource their colonialist ambitions. And they were undeniably effective, using merchants’ knowledge of trade routes to plot their growth, and allowing governments to save on overhead while still reaping the long-term benefits of the land and goods they accumulated. The vast profits they produced helped spur great eras of culture, art, and opulence across Europe, and in many places helped drive great leaps in the realms of culture, science, and society.

Bown spoke to Ideas from his home in Alberta, Canada, just outside Banff National Park.

IDEAS: You’ve written other books on scurvy and gunpowder. Why corporations?

BOWN: I kept coming across references to the English East India Company and the Hudson’s Bay Company, seeing on maps the amount of territory they owned, and wondering, who really owned all this territory? When you think of the British in India, you think of the British government — you don’t think of a company. And there was a really fantastic book called “The Island at the Center of the World,” and it was about the Dutch West India Company in New York. I didn’t know New York was basically founded by a corporation. And I thought this really should be considered an era in global history. It’s not just a couple of isolated incidents — there was an era where European governments were using the corporate structure to achieve their own foreign policy objectives. And in each case, I found that there was a particular person who was more or less responsible for that transformation. I hardly knew of half of them before.

IDEAS: For the European governments of the time, what was the appeal of creating companies and letting them run wild?

BOWN: Let’s take the Dutch East India Company. At the time — the very early 17th century — there were no accurate maps of the world, no established trade routes, and of course no modern communications. When a ship left, it was gone; if it came back two years later, great. The Dutch were in this military struggle for independence from the Spanish Empire. They tried to consolidate independent merchants. They said we can’t be competing with ourselves — we should be competing with Spain. So the government came up with the idea of creating a monopoly, a national force for going into these far-off regions. The political power, in that case, came afterwards as they got there and realized how successful they were. They started saying, think how rich we would be if we controlled everything!

IDEAS: With India it was more than a hundred years before Britain took actual sovereign control over the colony away from the East India Company.

BOWN: Part of it is that there’s so much money flowing in and everything seems to be going so well and so successful that there’s almost a willful blindness. The Dutch East India Company in Manhattan — they tried to restrict people from going there. With the Hudson’s Bay Company, most of the western United States now — Idaho, Oregon, Washington — was sort of a private wild fur preserve of the company. They’d ship all their employees back to Montreal instead of letting them settle there. George Simpson was delegated to be the sort of British colonial authority, as well of the head of the corporation, and these two roles ended up coming into conflict with each other. He chose [the corporation], and you could argue the result was a severe blow to the British Empire back then. In order to increase the profits of the company, he sold part of his national interest.

IDEAS: These are the very nations that were developing progressive ideals at home — it’s fascinating how they could promote cruelty and unfairness abroad.

BOWN: It was a very enlightened era, where there were discussions about responsible government, and in the case of the Dutch, struggling against the tyrannical rule of the Spanish Empire. At the same time there were also your more militaristic, narrow-minded people aligned with the hard-core philosophy of Calvinist Protestantism. They found their outlet in people like Jan Coen from the Dutch East India Company. They weren’t getting respect in their own country, but when they got overseas....After a time, news reports began trickling back, people coming back and saying, hey, this is quite foul. That’s why eventually the corporations were stripped of some of their powers, how the colonial outposts actually began — they didn’t necessarily want that, but small incremental steps eventually led to the Dutch having control over all of Indonesia. Who would have thought that when the first ships set out to collect some nutmegs?

IDEAS: One of the interesting points you make is how there’s a shared class background for many of these companies’ leaders.

BOWN: None of these merchant kings were born into that kind of power. Robert Clive’s family was reasonably well off — his father was a lawyer, he was a clerk. He could have had quite a decent life for himself if he’d just been a clerk in an overseas trading company. But he comes back essentially the richest person in the entire nation after 10 years of work over there [in India].

IDEAS: Did you consider any present-day analogues?

BOWN: In one sense it was a sort of evolutionary dead end of capitalism. There were so many problems with it that eventually all of these companies were taken over by the government. But there are countries in the world right now where the state and commerce are more closely linked. The classic example is China, of course. Or with like Halliburton or something, you have that same sort of melding of politics and commercial activity. It’s not as extreme, and people certainly aren’t celebrating it the way they would have a couple hundred years ago. The head of Halliburton isn’t a great national hero. I think we have enough structures and checks and balances in almost all the Western societies that that’s not the force that’s really pushing forward.

J. Gabriel Boylan is an assistant editor of Harper’s Magazine.