Chapter 5. The Economics of Violence

Commerce has often been seen as a civilizing passion, a doux commerce that obviates the need for violence. Rather than bloodying each other fighting for a fixed amount of resources, rivals could each specialize in producing wanted goods and trade them for coveted goods the other held. Specialization in production rather than destruction would increase surplus and reduce production costs. Peace would vastly lower the cost and danger of protecting property and facilitate exchanges. In the world of comparative advantage that classical economists Adam Smith and David Ricardo imagined, the race to acquire ever more material goods would lead to cooperation as well as competition. The market would channel aggressive, individual militaristic urges to socially useful prosperity.

Some historians even argue that this vision came true—at least for a while. Once true capitalism emerged in the beginning of the nineteenth century, a Hundred Years’ Peace reigned from 1815 to 1914. Struggle was confined to the marketplace rather than the battlefield.

This rosy picture of the healthy effects of the spread of market economy unfortunately hides the historic foundation of violence upon which it was built and the continuing use of force that persistently underlay it, particularly in the non-European world. “Primitive accumulation”—that is, simply seizing property and coercing labor—has been a common activity for thousands of years. Tribute and booty funded the Babylonians, Assyrians, Egyptians, and Mayas. While some trade existed, coercion (explicit or implicit) was a much more important motor of accumulation than was voluntary exchange. Wealth was based much more on the size and power of armies and tax collectors than on productive technology and market operations. Economically rational market calculators were often impaled on the swords of Mongolian troops or Viking raiders. At other times, they concluded that force was indeed an effective cost-cutter and joined in the violence themselves.

The relationships between traders and those who gave them protection (including unwanted “protection”) away from home has varied over time. In Venice the government compelled all traders to travel in a government-organized

convoy, organizing both protection and much of the actual trading through the state. The Portuguese and Spanish tried to export this model from the Mediterranean to the Atlantic, Pacific, and Indian Oceans, with mixed success. The Dutch and early English overseas traders took an opposite tack, with the state chartering private companies to handle both war-making and trading. So here, too, violence and commerce were in the same hands, though now they were private rather than public. As the historian Frederic Lane put it, these firms “internalized protection costs” and could make them part of rational planning and calculation. On the other hand, the chartered companies had to pay those costs, which became increasingly ruinous for anyone but a government as the scale and price of warfare rose in the eighteenth and nineteenth centuries. Only then did Europeans come to think that there was a “normal” division of labor between merchants who traded but did not fight and a state that fought but did not trade—though it was not always clear whether that state was more a “night watchman,” merely protecting property, or an armed robber “opening” new areas to new kinds of trade by force. Even then, the new division of labor was not permanent: faced with the high costs of creating and ruling colonies in the interior of Africa, for instance, various late nineteenth-century European states once again chartered companies with monopoly rights in trade and the right to act as quasi governments. Even today, many companies—especially resource-based companies operating in remote areas—deploy large groups of private guards not easily distinguished from armies, and armies, such as the

U.S. army in Iraq and Afghanistan, hire tens of thousands of private “contract workers,” many of whom are armed. Thus, while it has seemed at times that peaceful consensual trade and physical coercion were becoming more clearly separated, the separation has never been complete. (One finds the same range of policies at work in various parts of Asia, though in different proportions: from a few Venetian-style monopolies to large “free trade” areas, and even some concession areas where licensed violence and trade worked in ways much like those of the chartered companies.) Moreover, economic violence is not just a base urge of the remote past, harnessed by the drive to “barter and truck.” Although “Westerners” have a tendency to forget about them, the Ottoman Turks were one of the world’s great empires for four centuries. At its height in the sixteenth century under Sultan Suleiman the Magnificent, the Ottoman Empire stretched from the gates of Vienna and Regensburg, Germany, in the west to Azerbaijan in the east, north to southern Poland and south to Egypt and Yemen. With one of the largest armies in the world, an admirable bureaucracy staffed in part by Christian slaves, and an indomitable will to spread the word of Allah, the Turks dominated southeastern European and Middle Eastern politics and brought relative stability to vast areas. The highways that connected China, India, and

Persia with Europe were safe, allowing commerce to prosper. But the engine of accumulation was conquest; the principal expense, the army.

The Ottomans so milked the cash cow of commerce to finance their military and bureaucracy that European traders sought other routes to the riches of the East. Thus the Turks drove the Portuguese and Spanish south to circumnavigate Africa and west to unwittingly bump into a New World (see reading

2.2 on page 57). Africa had been in contact with Europe for millennia. The main links with sub-Saharan Africa were through the gold and slave trades, now dominated by the Ottomans, who controlled Africa’s northern coast. So the Portuguese, making an end run, opened trading posts on the Ivory and Gold Coasts and established colonies on Africa’s Atlantic islands such as São Tomé. But this trade in humans, which played a crucial role in early modern European growth (and even more, of course, in American growth), depended upon violence. Once again, the relationships between violence and entrepreneurship varied, but they were always there. Most often Africans did the original enslaving, but the Europeans played crucial supporting roles, from bidding up the price (and so encouraging more raiding) to providing firearms to favored groups of raiders. Moreover the voluntary exchange of “property” between African and European slavers fundamentally changed the nature of the slave experience. Property though they were, most slaves within Africa had various sorts of rights—rights that often increased with time until they gradually joined the society that had captured them; and in many cases their children would be free regardless. But once they became transatlantic cargo, slaves could expect to be treated much more like pure chattel: a condition that could be maintained only if the slaveholders were willing to use vastly increased levels of violence. Although, as reading 5.1 illustrates (see page 161), exchange and profit were key elements in the commerce, violence and state power were far more instrumental than entrepreneurship. The technology was one of power and destruction, not production.

Moreover, as long as slaves had mostly remained with the societies that first enslaved them, the need for supervision and the fear of rebellion had limited the number of slaves that it made sense to capture. Once two continents opened up as markets for these goods, this constraint collapsed. The slave trade experienced unprecedented activity and profitability in the seventeenth and eighteenth centuries. Europeans were unable to colonize Africa until the late nineteenth century. Hence, for slaves to be worth purchasing for Europeans, they had to labor elsewhere. Unfortunately for the African chattel, Europe developed a sweet tooth at this time (see reading 3.6 on page 98). American Indians would not work in sugar plantations. In the Caribbean they died off so quickly when infected by European diseases that virtually the entire pre-Columbian population (which might have been as high as 10 million people) died off within fifty years of Columbus’s arrival. In Brazil the native male population was unused to agricultural work (see reading 1.8 on page 31). Despite brutal expeditions to enslave them, Indians simply refused to work long hours in tropical agriculture.

Poor whites were brought to some colonies as indentured servants, but always on the condition that they would be freed and given land after a certain term of service. Planters on small tropical sugar islands found this a burdensome condition to meet, and even the tobacco planters of Virginia, with a huge wilderness at their backs, disliked granting land to those who would soon plant their own tobacco and so glut the market. In the first couple of generations, the death rates of Europeans in the tropics and in the southern part of North America were so high that few of the indentured lived long enough to be given land, but as these problems eased a bit, the costs of relying on poor white labor became too high for planters. It was cheaper to pay a little more up front for slaves that the planter could keep for their whole lifetimes and to whom they never had to give land. So African slaves sweating in the blazing sun enriched Europe, and, once again, the activities of peaceful traders and violent kidnappers were closely enmeshed. Still later, when Europeans turned against slavery, many tropical plantations still would not or could not pay competitive wages; instead, indentures returned, this time usually involving Chinese or Indian laborers (see reading 5.8 on page 180).

Wealth came more directly (though fleetingly) to the Spanish by simply plundering the empires of the Aztecs, Incas, and other civilizations they encountered. Melting down golden sculptures and religious icons, the Spanish vastly increased Europe’s supply of precious metals (much of which was then transshipped to Asia in exchange for spices, silks, and other goods). Then Peruvian Indians were forced to work in the great silver mine of Potosí (see reading 5.2 on page 163). The mita labor tax that sent them into the deep shafts often was a death warrant. But the silver created inflation in Spain and great demand there for northern European goods. In fact Spain sucked in imports so fast that it wound up with not much more silver than it started with, being forced to turn to copper for domestic coinage. The big winners from the looting of Mexico and Peru were the British, Belgians, Dutch, and Germans, who sold their wares to affluent Spaniards, and many of them probably did not even realize that there was blood on the money they earned.

Some northern Europeans did understand the source of Spain’s new wealth and decided to cut out the middlemen. Officially mercantile companies, British, Dutch, and French merchants were just as willing to plunder as to trade. As reading 5.3 shows (see page 167), privateers, claiming that they were acting as agents of national glory, tried to force trade upon Spanish and Portuguese

colonials in Asia, Africa, and the Americas. Indeed it was much easier to raise funds for overseas ventures if the investment prospectus mentioned plunder, glory, and national pride than if it kept to a discussion of commercial opportunities alone. And when the colonists or natives these adventurers encountered did not want to trade, the pirates simply seized goods, raped women, and burned towns. This proved to be extremely profitable and, as a bonus, successful at reducing Spanish and Portuguese resources and naval superiority. The piracy of privateers and buccaneers so terrorized the residents of the Spanish Caribbean that they fled, leaving fertile areas such as Belize, Curaçao, Haiti, Jamaica, and Trinidad to be seized as colonies by the British, Dutch, and French; the Portuguese were driven out of the Red Sea and Indian Ocean. Honest merchants, engaged in the slave, Asian, or New World trades, were virtually indistinguishable from pirates. Similarly, a national hero such as Sir Francis Drake, raiding the Spanish galleons with the authorization of a letter of marque from Queen Elizabeth I, appeared very much a pirate to the Spanish. The Dutch—largely excluded from New World colonization by the mid-1600s—nonetheless profited from some of its worst aspects: during the brief period when they controlled part of Brazil, they had become deeply entrenched in the slave trade, and they made money expanding it for a century thereafter. The British, too, overcame their scruples to enter into the luxury trade of piracy and slavery. As reading 5.4 reveals (see page 169), even Robinson Crusoe, the famous island-bound, self-sufficient hero of hard work and self-sufficiency, actually was a slaver and an international trader.

Once the British and Dutch came to rule the seas and their merchants dominated world markets, pirates became a plague rather than the vanguard of a commercial invasion. As a result, the Royal Navy now hanged men it had formerly decorated. Reading 5.5 (see page 172), for instance, describes how the Royal Navy turned on the seaborne raiders of Sulu, even though British merchants had previously armed their expeditions, which helped provide goods that British merchants then sold in China.

Merchants and pirates had a close relationship, though the traders never referred to themselves as “pirates” when coercing trade at gunpoint. Violence was a great competitive advantage when it could be used to create monopoly conditions. As reading 5.6 demonstrates (see page 174), the corporation first came into being in order to pay for corporate violence.

Early modern trading firms also wanted to protect their markets from interlopers such as the buccaneers, whom they denounced. Reading 5.7 (see page 177), only partly in jest, suggests that the buccaneers of the eighteenth century were far better employers than their contemporary navy or modern- day corporate raiders. Despite the general perception that the service buccaneers provided was economically undesirable, in fact the cutthroats were

rather democratic and concerned employers. Multiethnic, multinational sea rovers, they adhered to strict codes of conduct and morality. But there is no denying that they, just like their swashbuckling, bemedaled forebears, lived and prospered through violence. Although their service provided a more egalitarian redistribution of the wealth than did the slave trade, silver mining, or merchant raiding, they, too, relied on a technology of terror. Finally, an animal rights advocate might see an uncomfortable slippery slope connecting the various early modern trades that involved hunting humans and the same period’s enormous increase in the efficient slaughter of whales, sea otters, beavers, and, later, buffalo.

Many scholars have noted that great financiers (in both Europe and South Asia) financed early modern wars in part because they lacked enough other attractive outlets for reinvesting their profits. Local trade was usually too competitive to yield high profits; long-distance trade was not big enough (and was often closely intertwined with violence anyway, as we have seen); production, for the most part, required relatively little capital before the age of machines. In such an environment, lending to cash-hungry, war-making princes (who could repay by squeezing the people harder, if necessary) was relatively safe and lucrative—and offered the crucial added benefits of heightened prestige and political access. Although there is much truth in this explanation of lending to governments, the rise of mechanized industry did not drain funds away from the financing of violence—even though fixed plant and equipment embodying the new technologies became a profitable way to invest unprecedented amounts of capital. Investments in war may have become a smaller percentage of the portfolios of capitalists, but the total volume of available capital grew so much that there was still plenty with which to finance an ever-growing amount of state violence. In fact, military budgets did not just keep growing in the nineteenth and twentieth centuries—they kept growing, for much of this period, at an increasing rate. This becomes quite clear when we look closely at the supposed “century of peace” that followed the fall of Napoleon.

The Industrial Revolution that arguably began in the last part of the eighteenth century supposedly crowned capital and markets king. Warfare was now subsidiary to the business of making money by producing ever more efficiently. The reign of haute finance is said to have created a century of peace. But this view is too Eurocentric. Yes, there were no major, prolonged wars in Europe between the Napoleonic Wars and World War I; but this period was known to the rest of the world as the Age of Empire, which was anything but peaceful. Violence not only erupted as a tool of capital accumulation, but also served as a weapon for self-defense against the forces of world economy.

Sometimes, in fact, it was some of both. Though both European-descended and mixed-blood elites had broken away from European empires throughout the Americas (1775–1825), a new wave of European expansionism conquered much of Asia and almost all of Africa in the nineteenth century. Meanwhile, the newly independent societies of America’s Atlantic seaboard carried out bloody conquests of their interiors, cementing control over large regions that European powers had often claimed only in theory. Where indigenous powers were able to resist these invasions, it was often through their own aggressive internal colonialism. As reading 5.10 makes clear (see page 184), the creation of modern Ethiopia was such a case, with Amhara and Tigrense conquering their neighbors, forcing people to grow coffee for export under dreadful conditions, and using the money thus earned to buy European weapons and expand further. Others—from Somalis and Zulus to Comanches and Sioux—also fought expansionist wars and (to varying extents) traded for European arms in their ultimately futile attempts to build states that could remain independent. Between roughly 1851 and 1870 in particular, some of the bloodiest wars ever known broke out on three continents, including the Civil War in the United States, the French invasion in Mexico, the Paraguayan War in South America, a massive rebellion (sometimes called the Sepoy Mutiny) in India, and the Taiping Rebellion and wars between the Qing dynasty and various borderland rebels in China. Modern weapons allowed age-old passions for killing to be expressed much more efficiently, and the increasing size of armies and expense of their weapons created huge opportunities for profit.

Fig: The Slave Trade, Fifteenth to Nineteenth Centuries

Slavery has existed in many times, places, and forms, and the sale and transport of slaves over long distances also has a long history. The two largest slave trades, however, both traded in Africans. One, dominated by Muslims, took captives to North Africa, the Middle East, and across the Indian Ocean, and lasted from the 800s to the 1800s. The other, perhaps even larger trade, took about 12 million Africans to European colonies (and ex-colonies, such as the United States) between the 1500s and late 1800s. These slaves provided much of the labor for major American cash crops (sugar, cotton, tobacco, coffee, etc.), some of the labor for mines, and also played other vital roles in the commercial and industrial development that made the Atlantic, for a time, the center of a new kind of global economy.

Violence took other forms beyond slavery, piracy, and war. Sometimes destruction and death were directed at wealthy groups within the country. Nationalist and racist policies were trumpeted to win political power and seize the assets of ethnic groups. The group most commonly targeted in European history was the Jews. Reading 5.11 (see page 190) relates the story of a German trading family that first prospered on the tide of international trade and then was torn on the shoals of nationalist xenophobia.

Besides being an important lever of accumulating wealth in the global economy, warfare has been a mother of invention. Many innovations, such as the invention of synthetic nitrates, rubber, and textiles (nylon), were occasioned by war. New foods, such as beet sugar and coffee substitutes made from cereal (Sanka), and methods of canning also issued from combat-created conditions. New mechanical techniques, such as Colt’s assembly line, producing standardized replaceable parts, and new forms of transportation, such as submarines and airplanes, were driven as much by the urge to destroy as the love of creation.

No doubt the total economic costs of war have dwarfed any such benefits. Even in the field of new inventions, it seems likely that the destruction of so many minds, and the diversion of many others from constructive to destructive projects, probably quashed more technical advances than war ever nurtured.

Certainly destruction has decreased the world’s total stock of wealth. But individual actors need not see or care about who loses from their gains, any more than slave traders and New World plantation owners had to think about what the millions of Africans they moved might have done in Africa. As historians, we can only look at what inventions have been made and how wealth has in fact been accumulated and redistributed. When we tell those stories, we see that bloody hands and the invisible hand often worked in concert: in fact, they were often attached to the same body.

5.1 The Logic of an Immoral Trade America was created by immigrants. We have all been taught that their hard work and ingenuity carved civilization out of the wilderness. Where did the early immigrants come from? In fact, before 1800 perhaps as many as three out of every four people who crossed the Atlantic came from Africa. Some 10 to 15 million people were herded onto the cruel slave ships and transported across the Atlantic.

We are all at least vaguely familiar with the transoceanic slave trade. Yes, it was horrible, and yes, it was profitable. But one question is rarely considered: why did Europeans take Africans all the way across the Atlantic to use in the Americas in the first place, rather than simply engage them in Africa itself? After all, the trade had a very high “leakage.” It has been estimated that for every 100 Africans purchased as slaves in the interior of Africa, fewer than thirty survived the Atlantic crossing and the first three years on the new continent. Moreover, one-fifth of the sailors died in transit. Surely, using slaves in African colonies would have been more efficient. They would have known the climate, crops, and technology. Slavery itself was a long-standing and widely used institution in Africa. Why then move them to another world?

The answer appears obvious: Europeans already had colonies in the New World and not in Africa. But that situation was as much a result of the slave trade as its cause. Why did not Europeans colonize Africa first? After all, Europeans had a much longer acquaintance with Africa. The Saharan trade had provided most of Europe’s gold for hundreds of years. And the first modern European colony on another continent was in Africa’s Ceuta (next to modern- day Morocco), which the Portuguese conquered in 1415. Navigation of African waters was known earlier and better than the seas of the New World.

Certainly parts of Africa were appropriate for European exploitation. The first large-scale sugar plantations were built on African São Tomé. In the sixteenth and seventeenth centuries some 100,000 African slaves worked its fields and refineries, as its fazendas became the prototypes for Brazil’s vast export complex (which eventually demanded some 40 percent of the Atlantic slave traffic).

Geography, history, and logic seemed to point to European use of slaves in Africa rather than the building of a new world in the American tropics. Yet that did not occur on any substantial scale until after 1880 when the slave trade was abolished. Why not?

In part, the answer lies in the large states and sophisticated warfare that Africans could use to defend themselves against imperialists. Long enjoying the horse, the wheel, and iron as well as obtaining firearms in trade, African soldiers were virtually on a technological par with Europeans. The cannon gave a slight edge to the northerners, but, as Joseph Conrad poignantly showed in Heart of Darkness, cannons could reach only a short way into the continent.

Still, this answer does not completely convince. The Aztecs and Incas, whom Europeans did conquer and colonize, had larger states and armies than their African contemporaries. Yet they fell much sooner to the Spanish and Portuguese sword and musket.

Could it be a question of values? Europeans could obtain what they wanted from Africans through trade because of their long-standing commercial intercourse. Amerindians, on the other hand, did not share enough values with Europeans to be interested in many exchanges.

This argument has some merit. Europeans gained the main goods they sought through trade in Africa, but they failed to open up the continent to trade. West African societies were not monetarized and did not embrace European goods until late in the nineteenth century. Africans did not differ much from Amerindians in their indifference to most European goods.

So what is the answer? Why did over 10 million Africans cross the Atlantic? The main reason was disease. Amerindians had no experience with epidemic diseases; they had no immunities. When the Spanish brought smallpox and measles, the Indian armies and empires collapsed. In many places 90 percent of the population died within a few decades of the conquest. The Caribbean was almost entirely devoid of its indigenous inhabitants within half a century. Since there were no native epidemic diseases in the Americas, Spaniards survived much better; but surviving was not the same as prospering. Spaniards and, later, northern Europeans did not want to work with their hands. Africans came to take their places. Africans had long had contact with European diseases because of the active trade between the two continents. Consequently, they were relatively immune to smallpox.

At the same time, disease protected Africa from European colonization. While Africans had developed some immunities to smallpox and measles, malaria, yellow fever, and other indigenous diseases were fatal to Europeans. Consequently, Europeans were loath to establish settlements on the African continent. They remained in small trading enclaves on the coast.

Silver and later sugar and tobacco paid for African slaves and in turn required the slave labor for production. A complementary triangular trade between Africa, North America, and South America arose. It became more profitable—and considerably safer and easier—to ship to the Americas African slaves often entrapped by other Africans than to create colonies in Africa itself. Disease and greed created an African diaspora.

5.2 As Rich as Potosí Deep in the interior of South America, ten weeks from Lima by mule, stands the 16,000-foot-high Cerro Rico peak, towering over a bleak, frigid, barren landscape. This was the end of the world, but it became the center of the world. It became a magnet for tens of thousands of people who founded the city of Potosí. This remote summit in this harsh land came to affect millions of people and irreversibly transformed the world economy and the course of history because it was a mountain of silver, the richest mother lode ever found.

The Incas had already worked Potosí with their flint picks. They used silver for their temples and jewelry. They were not anxious to share their secret with their Spanish conquerors, but by 1545 the Spanish were aware of the mountain. At first the Spaniards employed Incan techniques and Indian labor. This was quite successful for about two decades, as long as they could mine the four unbelievably rich veins that lay close to the surface. But the voracious Spanish appetite soon exhausted the easily exploitable veins. Potosí’s boom threatened to be very brief.

Spanish technology came to the rescue. Production was revolutionized in the early 1570s under the tutelage of Viceroy Francisco de Toledo. The discovery of the rich mercury mine at Huancavelica, Peru, in 1565 made feasible the patio method of extracting silver from ore by applying mercury. But first the ore, with its declining silver content, had to be crushed. Rich merchants and government officials turned miners invested millions of pesos in creating a maze of waterworks. To ensure water all year around in this dry land, four large reservoirs were built. Thirty dams and tunnels and canals brought the water to the crushing plants to provide hydraulic power.

Equally important, the viceroy solved the labor shortage. Labor was a major problem because Potosí was so far removed from population centers and because Peruvian and Bolivian Indians were not anxious to work for wages. They preferred their subsistence, barter economies. Toledo instituted a labor corvée system inherited from the Incas known as the mita. Indian villages were obliged by Spanish authorities to supply a certain number of men for the mines.

State coercion had to be used early on because Indians feared the dangerous mine work. The men worked six or seven days a week deep in the sweltering, dusty tunnels. They sometimes had to carry out fifty- pound loads of ore, climbing up ladders as much as 825 feet long, and then face the frigid air at the mine’s mouth. To avoid the labor draft, some villages paid off government officials. If they failed in their efforts and had to provide laborers, funeral services were held in the village before the men’s departure. Funereal music was appropriate. A priest newly ar-rived in Potosí gasped at seeing miners trudge by: “I don’t want to see this portrait of hell.”

Indians unable to avoid the mita trekked to Potosí and remained there a year. As many as 16,000 Indians were used at a time. Whole families often accompanied married men in order to provide the men’s food. By 1650 there were some 40,000 Indians living on the outskirts of Potosí. This was only one-fourth of the city’s population, however.

The barren, remote mountain gave birth to the largest city in theAmericas— indeed, one of the largest cities in the world. By 1600 there may have been as

many as 160,000 people living in Potosí, making it as large as Amsterdam, London, or Seville. Said one amazed observer in the 1570s, “New people arrive hour by hour, attracted by the smell of silver.”

However, no more than about 15 percent of Potosí’s vast population came to work the mines. The rest came to mine the miners. There were hundreds of carpenters, hat makers, tailors, weavers, cooks. Government treasury officials who ran the mint kept a stern eye on activities. Numerous sumptuous churches sprang up as Dominicans, Franciscans, and Jesuits competed to save souls. This was not another sprawling, dusty frontier boomtown. Built on an orderly Spanish grid pattern, Potosí’s stone buildings in the town center lined at least thirty regular blocks. But it certainly had its share of saloons, gambling dens, and, by one count, 120 prostitutes. With some 30,000 transients, violence and gang warfare were common. An exasperated judge complained in 1585 that Potosí was a den of thieves with “the most perverse sort of people the world has created.”

All these people had come to this distant place because for over a century it was the economic heart of South America and one of the most dynamic places

in the Spanish world. With the most silver, Potosí also had the highest prices on earth. This made it a magnet for merchants, because the city’s inhospitable surroundings demanded that all food and goods be imported.

The poorly paid Indian population could not afford much, but they purchased lots of potatoes, corn beer (chicha), and coca leaves. So much chicha was drunk on festival days that “small rivulets of urine” ran through Potosí’s streets. Coca under the Incas had been restricted to the aristocracy, but under the Spanish it became more democratic as thousands of workers chewed it to deaden hunger and energize themselves. It came from Cuzco, 600 miles away. Pack trains of 500 llamas regularly entered Potosí to bring these goods. The mining center required a total of 100,000 llamas to attend to its transportation needs (one can imagine the fragrance).

The Hispanicized population had far greater wants, turning Potosí into the center of a complex international trade network. Wine came from Chile and Argentina, as did mules, cattle, and wheat; cloth arrived from Ecuador. Brazil provided African slaves. Potosí’s millionaires also craved French hats and silks; Flemish tapestries, mirrors, and lace; German swords; and Venetian glass. These arrived not only on the legal Spanish fleets via Seville and Panama, but also through smugglers who circumvented the mercantilist routes. Peruleros, Lima merchants who bought directly in Spain and avoided the expensive fleets and royal taxes, joined French, Dutch, and Portuguese traders who landed goods in Argentina’s Río de la Plata and then carted them overland. At least one-quarter of Potosí’s silver exited through these illegal routes.

Potosí also reached across the Pacific. Peruvian merchants sent silver to Acapulco, Mexico, partly in trade for Mexican cacao and cochineal, but mainly for Asian goods. From Acapulco the Manila Galleons shipped Cerro Rico’s treasure to the Spanish-ruled Philippines, which was an emporium for Chinese porcelain and silks, Indian and Persian carpets, perfume from Melaka, cloves from Java, cinnamon from Ceylon, and pepper from India. Anything available in Seville, London, or Amsterdam could also be bought in Potosí—at a much higher price. But when one owns a silver mountain, price, distance, and difficulties shrink in importance. Potosí brought the world to it. Potosí’s wealth was legendary. “To be as rich as Potosí” was the ultimate dream.

Then the silver gave out. After more than a century of prosperity, the declining quality of the ore and increased problems with production forced mines to close down. By 1800 the thriving metropolis, once the equal of any of Europe’s leading cities, had become little more than a ghost town; and the world, which had once strained to serve its greatest delicacies and luxuries to the distant miners, forgot about Potosí. However, its legacy had rearranged the map of the world and had fueled the world economy. The silver of Potosí

and Mexico excited the avarice of the British, Dutch, and French, who set out to wrest away and imitate the Iberian colonial empires.

5.3 The Freebooting Founders of England’s Free Seas Between 1550 and 1630, England took the first major steps toward becoming what would be the world’s greatest commercial empire. Colonies were founded all along the coast of North America and in the Caribbean. The famous East India Company—often considered the world’s first multinational—was created and quickly set up numerous trading posts. Other companies were formed to trade with Africa, the Levant (our “Middle East”), Russia, and elsewhere. In all, roughly 13 million pounds was invested in joint stock companies that sought profit overseas. But the largest chunk of that money—more than onethird— went into one kind of venture: government-licensed and -regulated piracy, mostly targeted at Spain and its possessions.

Privateering was not just the biggest part of England’s investment in expansion; it was the most profitable. One historian has estimated that from 1585 to 1603, British pirates returned profits to their investors that averaged 60 percent of the cost of outfitting their ships. (By comparison, investors in the East India Company realized dividends that rarely exceeded 20 percent, and the Virginia Company never made any money at all.) Piracy provided much of the pizzazz that lured investors skeptical of commerce into financing overseas expansion.

Although merchants would invest in anything that looked profitable, much of England’s aristocracy and gentry still disdained commerce and invested very little in enterprises that expected to do nothing but trade. Brochures for them emphasized the opportunity for even passive investors to reap glory as well as profit by helping English privateers weaken Spain and pave the way for colonies that would open up the field for converting heathens and other noncommercial pursuits. (One brochure for a Newfoundland project went so far as to emphasize the excellent sporting opportunities the project would open up, giving potential investors a detailed description of a critter most had never seen: the moose.)

The glory (including a knighthood) heaped on the most successful pirates, such as Francis Drake, became the stuff of popular ballads, broadsheets, and even sermons, doing much of the work of prospectus writers for them. While nonmerchant investors usually did not put up much money (about half as much, on average, as merchants), their participation was crucial, making what might otherwise have been an exclusively land-oriented aristocracy into powerful supporters of a navy. In the end, piracy—both British

and Dutch—probably had more to do with the eclipse of the Spanish and Portuguese empires than whatever commercial superiority the northern Protestant powers might have enjoyed.

Why was piracy so important? Because of the nature of early modern European trade. With one important exception—the growing Baltic grain trade—virtually all of Europe’s seaborne commerce was in luxury goods: spices, gold and silver, furs and high-quality textiles, and, later, slaves and sugar. These cargoes made especially rich prizes, so a pirate needed to hit only one target to return to port with a big profit. And because shipping costs were a small percentage of the final costs of these products, there was no great incentive to minimize these costs: better to increase security by having a larger crew and a lot of gunports than to risk disaster by cutting costs that didn’t matter much anyway.

The resulting pattern fed on itself: because every merchant ship was armed for defense, any one of them could turn to piracy to supplement inadequate earnings if the opportunity arose. For centuries, all that changed was the players, not the game.

First the Genoese and Venetians vied for primacy; then the Spanish and Portuguese carried the biggest prizes; then the Dutch and British began to beat them at their own game. (By contrast, Chinese, Indian, and Arab merchant ships more often carried a mixed cargo, including lots of bulky staples, and kept few weapons on board because piracy was an episodic, rather than constant, feature of the Indian Ocean and South China Sea. Consequently, for all their skills in commerce and navigation, these traders were ill-prepared for the kind of armed trading the Europeans brought to their waters.)

Bit by bit, a new kind of trade emerged in Europe, and with it a new kind of shipping. As Holland’s cities began to live off grain from eastern Europe in the 1500s, suddenly there were lots of seaborne cargoes too cheap and bulky to be attractive prizes for pirates. Thus captains plying this route could afford to worry much less about protection, and with the relatively narrow profit margins on grain, timber, and other Baltic trade goods, these captains could not afford not to trim costs.

Soon the Dutch were building a new kind of ship, the fluitschip. Fluitschips were slow and no more seaworthy than other European vessels, but they required barely half the crew for the same size ship, and with little worry about having to fight off pirates, Dutch captains in the Baltic could take full advantage of the lower wage bills these ships allowed. With a large fleet of these ships, the Dutch were soon in a position to move into other European waters and undercut their rivals. They soon dominated almost all of Europe’s nonluxury ocean shipping, including the routes that brought Egyptian and other grain to several of southern Europe’s major cities. Dutch control of

the provisions trade became a wedge Holland could exploit to become the dominant trading community in most of Europe’s ports. (In wartime, when any ship was a target, the Dutch convoyed their fluitschips with warships built for that precise purpose—the logical complement to the new specialized merchant ships.)

Undercut on intra-European routes and plundered on intercontinental ones, southern Europe’s sea powers collapsed, leaving the Dutch and their British imitators to fight for naval and commercial supremacy. Eventually, the British won and, wishing to make the seas safe for cost-minimizing merchant ships (and a growing long-distance trade in bulk goods such as New World farm products), maintained a standing navy pledged to rooting out piracy—now mostly an activity of non-Europeans pushed to the margins of international shipping—all over the globe. In the new order, any armed trader would be suspect and harassed by a navy that proudly proclaimed its descent from Francis Drake and Martin Frobisher. But in fact, the British navy was really enforcing a world more like premodern Asia, and Britain’s illustrious forebears were close kin to those it now condemned as criminals.

Without pirates, neither of the two kinds of English sailor—mercantile and naval—into which the pirate’s role eventually split would have come to rule the waves.

5.4 The Luxurious Life of Robinson Crusoe Robinson Crusoe would not seem to be someone enamored of luxury. On the contrary, Crusoe is usually taken as a symbol of hard work, frugality, and austerity. Daniel Defoe’s novel, published in 1719, is seen as an inspiration for Max Weber’s Protestant ethic, an explanation of the relationship between worship, saving, and investing, not a tribute to leisure or conspicuous consumption. But the book and Daniel Defoe’s message have been often misconstrued as something quite contrary to Defoe’s intention. Instead of a celebration of self-sufficiency, the story is actually a tribute to world trade, especially in luxury goods, and a celebration of slavery.

It is true that early in the novel (arguably the first novel ever written in the English language), Robinson’s father gives him a speech against luxury. Crusoe spends the rest of the novel regretting that instead of listening to his father and joining England’s middle class, he took to the sea to trade.

Robinson Crusoe is indeed, in part, a celebration of hard work. Crusoe never submits to pleasure or leisure activities while on the island. He has the mentality of an accountant (which for a while Defoe was), keeping close

track of his warehoused stores, of the passing days and years. He husbands the liquor he brings ashore from the wrecked ship for special moments rather than downing it in one drunken spree. He spends his free time studying the Bible, not exploring the island. In fact, he waits eighteen years before he walks to the end of the island!

Not only does he disdain idleness and celebrate labor, but as a good middle-class Englishman, he rejects luxury. He does not bring ashore any fine clothes from the ship; instead he crafts a crude goatskin wardrobe, which he only wears at all because he is afraid of sunburn. On the island, cut off from others, Robinson concludes that things are valuable only according to their usefulness. He prefers a carpenter’s chest of tools, with which he can make things, to money, which he disdains as “stupid stuff” because there is nothing to purchase.

Self-sufficiency, frugality, and moderation do not seem to be values that would fuel world trade. But, in fact, Robinson Crusoe, as well as his inventor, Daniel Defoe, were very much involved in international trade, a trade often based on luxury goods.

Defoe was an entrepreneur before he was a writer. He bought French civet cats to use in the production of perfume, insured British men-o’-war in struggles with the French, invested in a project to salvage sunken treasure, wrote propaganda in favor of the Guiana colonization project, took shares in the infamous South Sea bubble, and participated in the African slave trade. He believed that England’s success would depend on international trade, not on self-sufficiency.

This view in fact underpins Robinson Crusoe. Although Robinson is isolated on his island in the Caribbean and he arrives with few mechanical skills, almost everything he has that sustains him comes from the foundered ship that he was crewing to Africa. Guns, powder, food, tools, everything is imported. Without these goods, Crusoe sees the island as “barren,” useless, rather than a utopian tropical paradise.

Why were these goods on board the ship in the first place? Robinson had disregarded his father’s advice to take the middle station and enter either trade or the law, instead entering into the African slave trade, one of the most profitable of enterprises. He does very well on his first trip, exchanging “toys and trifles” for slaves, investing much of the profit. On his return for a second sales trip to Africa, he is captured by Moroccan pirates and spends four years himself as a slave. His fortunes change again as he escapes with a fellow slave by stealing a boat. He sells the boat and his fellow slave to a Portuguese slave trader, who rescues them on the Atlantic and brings them to Brazil. There he invests his capital in land and begins growing tobacco and sugar, the principle American luxury crops of the era. When he is later

marooned on the island, it is because he has set out on another trip to Africa in order to buy slaves more cheaply than he can in Brazil.

So to this point, Robinson’s life has been occupied either in trade or in purchasing others to labor for him. He trades in the main luxury goods of his time: slaves, tobacco, and sugar. During his twenty-eight years on the island, he is self-sufficient; he survives and becomes modestly comfortable, but he

does not accumulate wealth. He never searches for any resources that would be good export commodities; indeed he is blind to anything that he did not already know previously. Consequently, when he is rescued, the only wealth he has are the coins he has salvaged from the wreck, money intended for commerce, not the products of his own labor.

He later begins a colony by importing people to “his” island. But that is paid for by the profits from his Brazilian sugar plantation and the returns from the invested profits of his first slaving trip, not from wealth from the desert island. After being reunited with the world economy and its luxuries, Robinson returns to a life of “rambling” around the world and further adventures, not to self-sufficient hard work. Robinson Crusoe and Daniel Defoe were so entrenched in a world of luxury trades that even this paean to sober Protestant values could not avoid the enticement and wealth of luxuries—and slavery.

5.5 No Islands in the Storm: Or, How the Sino-British Tea Trade Deluged the Worlds of Pacific Islanders The tea for opium trade may not be one of the nicest stories in the history of world trade, but it is one of the best known. As the British got hooked on Chinese tea in the eighteenth and nineteenth centuries, they needed things they could sell in China—but the Chinese did not want most European goods. For a long time, the British simply shipped silver coins east, but eventually political pressures back home to stop the silver drain grew irresistible.

Casting about for an alternative, the British hit on opium, which they could produce in large quantities in their new Indian colony. Eventually, the drug caught on, solving the English East India Company’s problems, but creating massive addiction in China. When the Chinese tried to stop the trade in the 1840s, a fateful conflict resulted, forcing China to open itself to free trade, missionaries, and other more subtle Western influences.

In reality, though, it was not so simple. The British did find some other items they could market in China that had powerful, and mostly negative, effects on the places that produced those goods.

It is true that the European goods that the East India Company wanted to sell in China did not go over too well—British woolens, for instance, were not widely welcomed in subtropical Canton, where English ships docked. But the English traders were no fools, and long before opium, they had found other things that the Chinese customarily bought from other parts of Asia: shark’s fins and birds’ nests (both very expensive delicacies), pearls, special woods (especially sandalwood), and more ordinary goods such as Indian cotton

(which was spun, woven, and then often reexported by people near Canton) and Vietnamese sugar. But each had its own complications.

The market for cotton was fairly large, but not easy to expand farther, since China produced most of the raw cotton it needed; the same was true for sugar. Sandalwood, on the other hand, was something the Chinese seemed to have an infinite appetite for, so the problem was getting enough supply. The wood grew on many Pacific islands, but not in huge quantities. In an era that knew little of planned, sustainable forestry, European ships would find an island (including some as far off as Hawaii), buy as much of the standing timber as they could, and then move on when all the conveniently located trees had been cut. Island after island was introduced to long-distance trade in this way, had a brief commercial boom, and then was abandoned, often after severe ecological damage had been done. Indeed, some of these islands would probably have been completely devastated by chieftains desperate to keep the flow of foreign goods coming (which heightened their prestige) had the rise of the opium trade not provided an alternate good for the China market. Meanwhile, the search for resins from other tropical trees, and for sharks’ fins, birds’ nests, and pearls, produced even stranger results.

The problem was that none of these goods could be cultivated; they could only be gathered in from the seas, jungles, and other forbidding settings in which nature produced them. Most of those settings were on or near the jungle-covered islands that today make up the southern Philippines and eastern Indonesia. In each case the work was dangerous, unpleasant, and—especially in the case of pearl diving—highly skilled. Since these islands and their neighbors were sparsely populated, making laborers scarce enough to have some bargaining power, there was simply no way to get enough free workers to do this work at a rate that the British were willing to pay.

Into the breach stepped the Sultanate of Sulu, a kingdom set on several islands claimed by Spain, but in reality independent. Always looking for allies—and revenue—to continue his ongoing war with the Spanish, the sultan coveted British guns, money, and various foreign goods (such as cloth and brass items) that made good presents for his main followers. Decades of on-and-off warfare with the Spanish had helped the sultanate hone two of its specialties—seafaring and slave-raiding—to the point of fine arts.

As Muslims, the Sulu could not theoretically enslave other Muslims. But Filipino Christians and followers of the area’s many local religions were fair game, and slave owning had long been an important sign of status and a source of wealth in Sulu society. As the British provided vastly better connections to the Chinese market for tropical ocean and jungle products and provided guns that made the sultanate’s forces stronger, Sulu slave-raiding reached new heights in the early nineteenth century.

In order to keep slaves from wandering off when they went out to gather jungle products, various incentives were used—including a share of the profits, the opportunity to become the master of other slaves, and, eventually, the right to freedom. Huge pyramids of masters, slaves, and slaves of slaves grew up; raiding for slaves switched from being an intermittent threat to a constant and severe problem. Many weaker kingdoms simply collapsed or became dependencies of Sulu. The Spanish responded by stepping up their campaign to conquer the sultanate. For many years the Spanish got the worst of most battles, but in the end, they did eventually conquer the islands in the 1870s.

If the British—a much stronger power than Spain—supported what the sultanate was doing, one might wonder how the Spanish ever won. That question leads to a final peculiar twist in the story: the British essentially supported the crushing of the Sulu kingdom that sold them these coveted goods. Britain’s Parliament outlawed the slave trade in 1807, and the Royal Navy was supposed to enforce the ban worldwide. Thus, even though demand from British merchants was behind the boom in Sulu slave-raiding, it made the sultanate an outlaw kingdom in the eyes of the British state.

Had the East India Company retained its government-licensed monopoly on British trade with China, and had the company not come up with opium to pay for its tea purchases, perhaps the navy could have been induced to look the other way. But the monopoly was abolished in 1834, and long before that, opium had made pearls, birds’ nests, and the like much less important. Meanwhile, Sulu ship captains, having developed a specialty in naval violence, were not above developing a sideline in piracy, one that became increasingly important to them as their trade to China became more marginal, but which certainly won them no friends in Manila, Singapore, or London.

By mid-century they were pariahs, while their erstwhile silent partners— having now moved on to drug dealing—were using the world’s largest and most powerful navy to chase them down in the name of civilization.

5.6 The Violent Birth of Corporations Why did seventeenth-century Europeans create the world’s first corporations? Looking back from 2012, the answer seems obvious: corporations seems like such a logical way to do business, especially on a big scale, that the wonder is that they were not invented sooner. The real answers, however, turn out to be more complicated and only loosely related to the advantages of the corporate form today.

The first real corporations—the Dutch and English East India Companies, West India Companies, and so on—were hardly the first big business partnerships, but they were new in several ways. They were anonymous: the partners

did not all have to know each other. They separated ownership from control: elected directors made decisions while most investors had only the choice of accepting those decisions or selling their shares. They were permanent: if one or more partners did want out, there was no need to renegotiate the whole arrangement. Finally, they were legal entities separate from any one owner, and they had unlimited life. The big trading partnerships of the sixteenth century and earlier had been created with a planned date of dissolution—sometimes at the end of one voyage, sometimes after a set number of years—at which point all the firm’s holdings would be liquidated and divided among the partners. The new firms, like modern corporations, did not self-liquidate: they built up their capital over the years rather than distributing it back to its separate owners.

Clever innovations, to be sure—but how many people at the time needed them? Very few. Over the next 200 years, almost no corporations were created for either manufacturing or intra-European trade. The capital needs of virtually all production at this time were small enough that people could raise the funds they needed without taking the risks of dealing with strangers. Even the new mass-production factories of the industrial revolution—Wedgwood china, Schneider (Le Creusot) iron, and virtually all the English cotton mills— were family firms, as were the coal-mining companies that fueled the new economy (turnpike and canal building were partial exceptions). Not until the post-1830 railway boom was there finally an industry that required so much capital and so long a wait before the profits started to roll in that the corporate form was really essential.

Where lots of patient capital was needed, even in the 1600s, was for economic activities that ranged beyond Europe. A round-trip voyage to East Asia could take three years to complete, and if a partnership wished to spread its risks over several voyages, the partners would have to wait still longer for the final payout. But even this did not require that the corporation have permanent life: the English Muscovy Company, which traded with Russia, for instance, did not have this feature. Moreover, there was considerable resistance to the idea among investors: with share markets not yet fully developed, they did not know if they would ever get their principal back unless the company had to dissolve at a certain date. Partly as a result, the Dutch East India Company was originally chartered with a long but finite life—it was to be liquidated in twenty-one years—and with compulsory high dividends. And Asian merchants who handled trade over distances almost as long—and who often continued to outcompete the Europeans on routes between the Middle East, India, Southeast Asia, Japan, and China all the way through the eighteenth century—apparently had no need of the corporate form.

So what made the turn to permanent life necessary? In a word, violence. The East India Companies were licensed not just to trade, but to make war

on the Portuguese, who had created fortified colonies and used their navy to claim a monopoly on trade from Asia; the West India Companies faced similar Spanish and Portuguese claims (and much stronger colonies) in the Americas. To compete, the northern Europeans reasoned, they would need to play the same game: seizing and fortifying territory and arming ships to patrol the waters. But this meant enormous costs for fixed capital in forts and ships and for working capital, such as provisions. (Asian traders largely refused to play this game, concentrating on the vast stretches of the ocean and coast where the Europeans could not enforce their monopolies. As a result, they had far lower overhead and could consistently undersell the Europeans wherever force could not create monopolies, which meant almost everywhere besides a few strategic straits.) In the New World, distances were shorter, but other problems were more demanding. Unlike fortified European bases in Asia, which could buy supplies and hire laborers from highly commercialized neighboring societies, New World bases needed to be much more self-sufficient and so had to be real colonies with productive agriculture—something that took much longer to create.

Because they needed so much capital to fend each other off, Europe’s overseas ventures could not possibly be organized without bringing in many unrelated partners. And because they needed so much fixed capital, only a very large trading volume would generate enough profit to make these ventures worthwhile. A very large trading volume, in turn, meant that very large amounts of working capital had to be tied up in inventories held overseas, awaiting the right moment to exchange them for goods that would sell back in Europe. Indeed, the founder of the Dutch East India Company’s empire in Asia, Jan Pieterszon Coen, waged an almost constant battle with Amsterdam for more capital. The European directors kept suggesting that, having achieved naval superiority, he could monopolize the spice trade back to Europe without much more capital by raiding; he replied that he could indeed do so, but that raiding discouraged trade and so would never yield a large enough volume to cover costs, even if he did achieve monopoly. To make the forts pay off, whole new lines of trade needed to be developed and others greatly expanded—and that meant more capital and more patience. After years of conflict and many revolts by shareholders who wanted the company to wind down rather than grow, Coen and his successors won: the company was rechartered rather than liquidated after twenty-one years, the directors got the flexibility to lower dividends when they needed to build up capital, and Dutch investors learned to operate like shareholders today.

The idea of companies that took care of their own protection costs did not last, of course. As the costs of war-making soared in the eighteenth century, both the English and Dutch companies staggered under the burden; when

they tried to make back these costs on goods they monopolized, they found themselves very unpopular and often undercut by smugglers. (The English East India Company’s problems with tea sales in America are only the most famous example.) By the 1830s all these companies had collapsed, and their colonies had been taken over by governments—just as a new era of capital- intensive industry was about to create more productive uses for the corporate form that they had pioneered.

5.7 Buccaneers as Corporate Raiders Pirates have gotten a bad name. They are seen as savage, predatory dictators, as parasites and wastrels, “monsters in human form.” They are outside the law and outside accepted morality. Financiers, on the other hand, are often viewed as creative and intelligent, directing resources to the most deserving enterprises to increase productivity. The pirate is a threat and a defiance to the capitalist system of profit and property, while the financier is its guardian angel, ensuring its successful operation. Yet in many cases the differences between the two are not so large. Corporate raiders, like the pirate, often make nothing from something, tearing apart carefully assembled structures and leaving their victims marooned and desperate. Like pirates, corporate raiders use other people’s money to profit themselves.

However, this comparison of the pirate and the modern corporate raider does an injustice—to the pirate. Detailed studies in the last few years show that in fact the financier could learn something from the pirates of the sixteenth, seventeenth, and eighteenth centuries, not just about raiding, but about personnel relations. Ironically, pirates tended to follow closely a moral economy. Outside the reach of the state’s law, they had to craft laws for themselves, laws that they obeyed across seas and continents.

Piracy of some sort has existed for thousands of years and over most of the world. Who was a pirate was usually defined by the power with the greatest navy. As a famous pirate is said to have told Alexander the Great, “You who seize entire kingdoms are celebrated as a great emperor. I, who merely take ships, am but a lowly pirate.”

The pirate business picked up in the sixteenth century when shipbuilding and navigational technology created a boom in international overseas trade. It became especially noteworthy in the Caribbean after the Spanish discovered silver and gold in the Americas. The first pirates in the Americas, men such as John Hawkins and Francis Drake, attempted to encroach upon the Spanish Lake to sell contraband. When rebuffed, they entered into piracy. During times of war between England or Holland and Spain, the privateers were issued letters of marque, which made them volunteers in their country’s navy. For these

sixteenth-century raiders, then, piracy was simply an extension of trade and warfare. The ships were outfitted by merchants much as in any commercial venture, and the stockholders received a large share of the booty. Certainly, pirates employed predatory trade practices.

But the early merchant pirates gave way in the mid-seventeenth century to buccaneers who were not black princes of commerce or part-time irregulars in her majesty’s navy. They were multinational, multiethnic, democratic bands of sea rovers. Originally they consisted of castaways, runaway slaves, escaped criminals, and religious and political refugees who scrounged an existence on a remote part of the island of Hispaniola. Though the buccaneers were peaceful and innocuous, the Spanish governor could not abide these men beyond his command, so he sent troops to hunt them down. The buccaneers retreated to the small island of Tortuga, created the “Brethren of the Coast,” and declared war on all Spaniards. Together with privateers, they proved so devastating that not only did they force the Spanish into an expensive system of escorted transatlantic fleets and coastal forts, but they seized many silver- laden galleons and even sacked some of the major Spanish port cities, such as Cartagena and Porto Bello. The Spanish Caribbean was largely abandoned, and even along the continental coast, cities were built at least fifty miles inland to avoid the threat of pirates.

How did the buccaneers become so numerous and fierce? They were joined by many British, French, and Dutch privateers who became self- employed mercenaries of sorts when wars ended and their activities were no longer condoned by imperial powers. Although their actions were the same as when they were privateers, they trespassed the line that separated patriotism and glory from piracy and infamy. But that was not the only difference.

Buccaneers operated as partnerships in which each crew member had a stake. Before setting out, the crew drew up articles of conduct. The leader was agreed upon by the crew according to his naval and martial ability and his capacity to command respect and discipline. No one ever became captain of a pirate ship because of influential parents, college connections, or strings pulled by absentee investors. Unlike in the Royal Navy, the corsair captain was no despot. Noted one observer, “They only permit him to be captain on the condition that they may be captain over him.” Rules were enforced by a council of the crew. Although drinking, gambling, whoring, and pederasty were permitted on most ships, some antisocial behavior was severely punished: hiding some of the loot was punishable by marooning on a desert island or death.

Buccaneer ventures were essentially partnerships. They were all paid on commission: “No prey, no pay” was their motto. Once a prize was taken, the booty was distributed among the buccaneers, who voted on the amount of individual shares. Generally the captain received two shares, some of the staff such as the surgeon received one and a half, and all others received one share. Since their ship was owned jointly by the crew (usually it had been

seized from someone else), none of the proceeds were paid to investors back in Europe, as was done by the early pirates. The buccaneers applied their own labor theory of value. Buccaneers also had their own disability and life insurance. Monetary awards were doled out for the loss of body parts, and widows were sometimes given the share of their departed pirate husbands.

Buccaneers tended to treat the crew and passengers of captured ships well if they did not resist capture. They would be left with food and ship or else brought to a safe port. The pirates would, however, “distribute justice” to the captain of the conquered ship if he had mistreated his crew, which was frequently the case. Often the captive crew preferred the democratic life of the pirate and joined their captors. As explained by pirate captain Bartholomew Roberts, who had seized 400 ships, “In an honest service there is thin commons, low wages, and hard labor; in this, plenty and satiety, pleasure and ease, liberty and power and who would not balance creditor on this side, when all the hazard that is run for it, at worst, is only a sour look or two at choking?”

Therein lies another difference between the pirate and the corporate raider. The latter, who disdains and dismisses his own crew, sinks captured ships and abandons their crews and passengers, and seizes wealth with a fountain pen rather than a sword. He therefore has no fear of choking and retreats, pockets full, to his own Caribbean island with the law on his side. Ah, for the days of pirate justice.

5.8 Looking for the Next Worst Thing: Emancipation, Indentures, and Colonial Plantations After Slavery Nineteenth-century Western societies were unmatched in their faith that free markets and human freedom generally went together. And there were few prouder achievements of that liberal faith than the abolition of slavery: in the British Empire in 1833–1834, the United States in 1865–1866, and elsewhere at various points in the nineteenth century. Although many people wanted abolition at any cost, others favored it in part because they were sure that relying on free labor would prove not only more moral, but more profitable. But when things did not turn out so neatly, abolition—and labor policies more generally—took some strange turns.

Colonial sugar plantations posed the biggest problems. As emancipation neared in the British Caribbean, Lord Elgin confidently predicted that wages would make ex-slaves work even harder and would convince slaveholders worldwide to abandon the whip. But he probably had no idea how hard many slaves actually worked. On some U.S. plantations, slaves ate more than 5,000 calories a day—more than you use climbing Everest—without getting fat. Given

a choice, they preferred anything else—subsistence farming on unclaimed hillsides, renting better land to grow crops for local markets, or leaving agriculture altogether. (Men who were newly emancipated and thus had become “real” household heads were often particularly eager to keep “their” women out of the fields.) Desperate to keep labor costs down, some colonial legislatures mandated “apprenticeships” on plantations for the newly freed—though nobody had to teach them how to cut cane. For decades to come, colonial authorities repeatedly argued that Africans and Afro-Caribbeans were an exception to the universal rational self-interest that they believed would make all other people work hard and budget adequately if the alternative was hunger; consequently, ex-slaves still “needed” forced labor until they were ready for a market-driven world. Once in place, this idea was also applied to Africans in new colonies who had never been slaves: for example, it rationalized forced labor in mines in Natal and on Senegalese roads. In fact, though many Africans—among others—chose not to focus exclusively on maximizing their earnings, many others were unavailable for plantation work precisely because they were busy producing for local markets. Early twentieth-century British colonies in southern Africa were all too aware of this trend—and banned black small farmers from growing market crops to protect the profits of white settlers.

Such measures still did not suffice—so old and new tropical colonies imported indentured servants. More than 2 million such people, mostly from India and China, were transported to plantations in the Caribbean, Indian Ocean, Hawaii, and East Africa. Even more went to Southeast Asia, though under conditions so varied that it is hard to tell how many count as “indentured.” Like the indentured whites who had come to early colonial North America, the newly indentured had their passage paid in return for a set term of labor, usually five years; unlike those whites, the bonus awaiting them at the end was not usually a piece of land, but a ticket home, which many declined.

From the beginning, some people called this a new slavery—which it both was and was not. Workers had finite obligations, were paid wages, and had signed contracts (though what they knew when they signed is hard to tell). Since they remained legal persons, rather than private property, some governments regulated their treatment in ways that mattered. Ships and passengers headed for the British Empire got at least a minimal health inspection, and death rates on those voyages were one-third those on the essentially unregulated route from China to Cuba. Some colonies insisted that one- third of those imported be women—which allowed the indentured to create something much more like other immigrant communities. Most importantly, where laws were enforced, masters were much less likely to extend indentures or dock wages illegally. Wages eventually reached almost the level of those of farmworkers in the poorer parts of Europe—well above those in India or China. But the

law was still mostly the bosses’ tool—absenteeism, for instance, could lead to prison, making it hard to call this “free labor.”

Still, plantation owners could not re-create what they had under slavery. In the British Caribbean, they regularly complained that indentured Indians did barely half as much per day as enslaved Africans had. Even allowing for some nostalgia, this suggests just how much work slavery had squeezed out of people and how impossible it was to duplicate that once coercion was even somewhat limited. By 1920 both China and India had banned the “coolie trade,” and indenture disappeared as a legal way of recruiting labor (though it survives underground even today). While it lasted, it made big profits for some, and some of those indentured bettered their lives as well. It certainly changed the ethnic mix of many parts of Africa, the Americas, and other places. In another sense it was bound to fail—an embarrassing reminder that merely calling slavery “backward” did not dissolve the reliance of some very modern enterprises—and their customers, bankers, and others—on forced labor.

5.9 Bloody Ivory Tower by Julia Topik

Billiards seems an innocuous pastime, a diversion little connected to the currents of world history. But the balls that rolled on the tables of nineteenth-century sportsmen were made of ivory, which had a long history. The tusk of the elephant, first used for decorative purposes more than 20,000 years ago by Stone Age humans, later inspired Egyptians, Minoans, and Greeks to carve figurines, jewelry, and gods. The Bible’s King Solomon had an ivory throne. Churches and temples in the Middle Ages were decorated with ivory images.

Then the Industrial Revolution found new uses for the ancient precious material: billiard balls, piano keys, knife handles, and chess pieces. The volume and value of the trade swelled. By the turn of the twentieth century, more than 1,000 tons of ivory was imported yearly into London, Antwerp, Hamburg, and New York. The gentlemen coolly stroking balls across elegant felt, while the piano gently played in the background, were not aware of part of the story. Ivory’s lavish, fine-grained texture and opaque shell was doused in the blood of hundreds of thousands of elephants and millions of Africans. Ivory created colonies.

Colonies were on the mind of King Leopold II, the monarch of Belgium, a small country that was devoid of colonies in a mercantilist era. Leopold knew that if he ever hoped to control a territory he would have to look toward Africa, the only continent that had been left almost completely unsettled by the European powers. Eighty percent of the entire land area of Africa was still under indigenous rulers, making the continent ripe for conquest. He used a

series of shrewd diplomatic maneuvers to gain control of the Congo region. As Adam Hochschild remarked in a recent study, “If he was to seize anything in Africa, he could do so only if he convinced everyone that his interest was purely altruistic.” In a stupendously ironic and tragic moment in history, Leopold found his allies in the European abolitionist movement! He would reinvigorate the slave trade in Africa after the international traffic in humans had all but died out, exactly the opposite of what the abolitionists sought.

Leopold began to show his interest in Africa at first by voicing his concern over the illegal slave trade that continued to thrive despite the treaties and the proclamations of many powerful European governments. Leopold claimed to protect Africans by sending his military to rid the area of slave traders and to modernize the Congo. He created the International African Association to open routes into the interior to create hospitals, scientific laboratories, and pacification bases. The association purportedly was to establish peace among the chiefs and procure them just and impartial arbitration in order to abolish the slave trade. Leopold convinced the world that his intentions were purely philanthropic.

But philanthropy does not pay and is a weak foundation for a colony. Leopold’s eyes strayed toward the abundant source of ivory in the region: the herds of elephants protected by the tropical forests. However, the king had to first control the area before he could start to exploit it.

Leopold started using African mercenaries in 1879 to control the Kongo, Pygmies, Kunda, and other peoples who could not comprehend the idea that someone could own the land that they had inhabited for thousands of years. In 1888 Leopold organized his mercenaries into the Force Publique, which was divided into small garrisons that were usually composed of several dozen black soldiers under one or two white officers. The king gave bonuses to white agents according to the number of men they impressed into the Force Publique and the number of laborers they captured. The white agents usually delivered their “ready and willing” workers in chains.

Leopold ran his territory mostly through military power. He carved out small areas and gave willing Europeans complete control over their inhabitants. The king left white men alone in charge of areas for months at a time; little or no punishment was meted out to soldiers who mistreated the Kongo.

The natives were brutalized. White men sailing down the Congo River would shoot Lunda or Mongo for sport. They justified their cruelty by their belief that the indigenous people were simply animals, inferior and devoid of human emotion. The common practice in the Congo was to punish the captive peoples with whippings, chaining them to the ground and giving them thirty lashes in a row, sometimes more. Sometimes ears and limbs would be cut off.

With the native Kongo and Lunda cowed, Leopold began to treat both vacant and nonvacant land—as well as everything on it—as his property. His

Photograph of Congolese laborers who have had their hands severed by Belgian colonial authorities for failing to meet their rubber production quotas.

soldiers left piles of dead elephants, and Africans were forced to carry tusks on their backs. The self-proclaimed abolitionist depended on slavery, while cruelly naming the colony the Congo Free State. Ivory and produce filled the holds of ships sent to Belgium, but returning ships were practically empty when they arrived in the Congo, because the workers in Africa were not being paid. In search of billiard balls and piano keys, the Belgians were stripping the Congo of its resources. This was theft, not development.

Leopold conquered the Congo region behind a badge of justice. He cried out for civil rights and for the abolition of the atrocity called slavery. Yet he ran the territory with a whip. The blood spilled along the banks of the Congo, of the 5 to 8 million Africans and the hundreds of thousands of elephants who were killed, went unseen by his royal eyes. And ever more billiard balls rolled in the elegant parlors of New York, London, and Antwerp.

5.10 How Africa Resisted Imperialism: Ethiopia and the World Economy

Africa, somewhat remote from the world economy in the early modern period except through the destructive slave trade, became much more closely linked in the second half of the nineteenth century when it was taken over by Western

European powers. The industrial and transportation revolutions in the North led to the Suez Canal (1869) and a hunger for African colonies. That appetite grew after the 1884 Berlin Conference divided up the continent, sparking a “scramble for Africa.” Amid this European onslaught, one country stood out as an African bulwark of anticolonialism: Ethiopia. While its neighbors in Somalia, Kenya, Sudan, and Egypt were colonized by the Italians, French, British, and earlier the Ottoman Turks, Ethiopia remained free of foreign occupation (except for failed efforts by the Egyptians and Turks in Harrar in the 1870s and the abortive Italian conquest in 1936–1941). In the twentieth century, its emperor, Haile Selassie, known as Ras Tafari before becoming emperor in 1930, was applauded by the League of Nations for denouncing the temporary Italian conquest of Ethiopia and was put on the cover of Time magazine with the caption “king of kings.” In a different sort of international acclaim beginning at roughly the same time, he was—and is—venerated by the Rastafari movement based in Jamaica, which views him as God or Jesus and considers Ethiopia to be the biblical “Zion,” free of the forces of “Babylon” (European civilization). Selassie, who reigned for forty years, was so respected by other African heads of state for his resistance to European colonialism that he was elected in 1963 as the first chair of the Organization of African Unity. How do we explain Ethiopia’s and Selassie’s exception to the European whirlwind of African conquest? What was different about Ethiopia? How did it remain free?

The most common answer is that Ethiopia had a special advantage because it was an ancient civilization with a 3,000-year-old royal lineage that allowed it to resist foreign aggression and keep the nation free from foreign control because it could appeal to tradition. A corollary is that Emperor Selassie was an especially gifted leader driven by the urge for freedom and modernization. We will see that these explanations are questionable at best.

Certainly it is true that the civilization had long been known in Europe. The Greek geographer Herodotus had included “Ethiopia” as one of the few African place names on a map in the fifth century BCE, and Homer mentioned Ethiopians as living at the far end of the world. This reflected not only acquaintance and commercial exchange between the two peoples but bias: Ethiopia meant “burnt faces,” distinguishing the African people from the paler northerners. Soon “Ethiopia” came to stand for all peoples of Africa, as if the entire continent were homogeneous.

Not only the country’s name, but its state purported to be ancient. Haile Selassie claimed to be the 225th in an unbroken line of succession dating back 3,000 years to King Menelik I, the son of the biblical King Solomon and the (supposedly Ethiopian) queen of Sheba. In addition to this Jewish heritage, Ethiopia was also one of the first places on Earth to adopt Christianity when its king converted around 350 CE. Word of the Christian kingdom in Africa was spread by crusaders in Europe some 800 years later, when they brought back from the Holy Land tales of Prester John, a devout Christian sovereign who ruled over a wealthy land of exotic, peaceful, crimeless, and united people. So some positive concept of Ethiopia had inhabited the European imagination for a long time.

True, some Europeans and North Americans were less in awe of the ancient civilization; colonizers and adventurers tended to lump Ethiopia into the same “Darkest Africa” narrative as other African peoples, viewing them all as primitives cut off from the winds of historical advance. But ancient Ethiopia was not Darkest Africa. Rather than being isolated in their mountain fastness, the people of what we know today as Ethiopia had long traded such natural products as skins, tusks, musk, and gold widely down the Nile, up and across the Red Sea, along the Arabian Sea coast, into the Persian Gulf, and across the Indian Ocean. They had close commercial relations with the Egyptians, Greeks, Romans, Arabs, Persians, and Indians and indirectly traded with the Chinese.

Ethiopians’ precocious participation in Mediterranean and Indian Ocean networks does not explain their resistance to nineteenth-century European colonialism, however. Much of highland Ethiopia became cut off from Indian Ocean and Mediterranean commerce when Muslims on the other side of the Red Sea in Yemen began to stake out coastal African areas a couple of centuries after Muhammad’s birth; they had established fully formed states by the 1400s. The Christian highlands of the interior, known as Abyssinia, turned inward, ignoring the outside world.

So what else is wrong with the customary explanation of Ethiopia’s ability to retain its independence? Actually, there was no Ethiopia until the early twentieth century when the name reemerged; the area within Ethiopia’s current borders was fragmented into at least seventy different languages and eighty different ethnicities as well as dozens of religions. It was divided into three main areas: the Christian highlands in the center and west, known as Abyssinia, which itself was separated into many feuding kingdoms and principalities; the south, broadly known as Oromia, composed of many pastoral peoples who invaded in the sixteenth century from Somalia and Kenya and who practiced traditional religions; and the Muslim east in Hararge and Eretria. Far from being a unified monarchy, “Ethiopia” suffered from feudal divisions, militarization of power, and a wealthy church more prone to invest in churches and monasteries than public works. The economy was fragmented and undercut by internal disputes, territorial seizures, and religious jihads and crusades that were exacerbated by outside Turkish, Egyptian, and European imperialists.

If antiquity and homogeneity do not explain Ethiopia’s successful resistance to colonialism, do its riches? The European fantasy of Prester John’s fabulously wealthy kingdom was belied by a land with no banks, where salt served as money and where transportation was achingly slow. Crawling across a landscape dotted with toll-charging robber barons, lumbering caravans could take a year to reach the coast from the interior. Only precious goods could afford such costs and delays. The most revealing—and sorrowful—explanation of the virtual inexistence of Abyssinian trade was given by a Christian duke, Ras Michael, who welcomed a British traveler, Henry Salt, in 1810 as the first British envoy to his court and “professed his most anxious wish to encourage, by every means in his power, an intercourse with Great Britain.” But he feared that British merchants would not be sufficiently compensated “for engaging in so precarious a trade; more especially as the Abyssinians were not much acquainted with commercial transactions and the unsettled state of the provinces prevented the usual circulation of gold and other articles which are brought from the interior.” The Ras concluded that even if his government were able to subdue civil wars and banditry in his lands, the naval superiority of the Muslims in the Red Sea would still prevent shipments abroad.

So how were the Ethiopians able to create a national state and something of an export economy under these spectacularly unpromising conditions that seemed ripe for colonial conquest? The answer is that Ethiopia was in fact colonized, but in part by the native Amharas and Tigrense of the interior, who fought and defeated the Egyptians in 1875 and 1876, the Italians at Adwa in 1896—and mostly conquered neighboring peoples such as the Oromos, the Sidamos, and the Somalis. The emperors who assembled a national state in the century after 1872, Yohannes IV, Menelik II, and Haile Selassie, did so in collaboration with the Europeans. But this required an intricate and dangerous dance since the Europeans were bent on conquering Ethiopia, not aiding it.

The collaboration took two forms: purchasing modern weapons and munitions to build a strong army, which required stepped-up exports and improved transportation; and playing off the European powers against each other. Both were risky and required concessions, as neighboring Somalian sultans discovered. Although the Europeans claimed they only wanted ports, coaling bases, and a presence from which to end slavery in the Somilias (today’s Somalia was divided into British, French and Italian territories), their objectives changed as new commodities such as rubber and coffee became important exports. Beginning in the 1870s, Somalian sultanates went from friendship treaties to European protectorates and finally fell into Italian, French, and British colonies.

The Italians tried the same strategy in Ethiopia, but Emperor Menelik II avoided it. He followed a two-prong campaign that was a bit contradictory: one prong reinforced feudal relations while the other was modernizing. To defend his nascent realm, the emperor continued wars against adjacent tribes and kingdoms. Using modern European weapons and buying off warlords with promises of land, subjects, and slaves, Menelik’s forces advanced Abyssinia’s borders well to the south and west conquering such important Muslim strongholds as Harage and defeating the pastoralist and seminomadic Oromos while buying off other Christian princes.

This campaign to free Ethiopia from outsiders led to vast land seizures, the end of communal properties, and the impressment of conquered people into servitude under the yoke of conquering soldiers, aristocrats, and even priests. Some of this newly seized land was turned to coffee production for export. Although coffee originated in Ethiopia, it had never been much exported until troops under Menelik and then Haile Selassie conquered the coffee-growing areas and turned their production abroad. Ironically, although the modern, advanced weapons and the railroad, supplemented by the telegraph, helped defend the country from imperialist takeover, initially they reinforced and transformed the nature of this age-old institution of slavery. Unlike historical Ethiopian slavery, which had tied millions of people to feudal lords within Ethiopia and sent millions of others abroad to engage in service activities as cooks, porters, and soldiers, and provide their masters with subsistence foods and firewood, now, for the first time, “modern” slavery turned Ethiopian slaves to commodity production, especially of coffee.

This could hardly be called an anticolonial policy since it was a thorough program of internal colonialism. It could arguably be called anti-European in that export earnings were partly employed for defensive purposes, but it was a precarious anti-Europeanism. To expand, Menelik initially had to sign agreements with the European powers. The Italians used their pact to seize Eritrea on the Red Sea coast and to claim a protectorate over all of Ethiopia. Menelik responded by turning to the competing imperialist power, France, and authorizing the country’s first railroad, a 487-mile line that connected Ethiopia’s new capital at Addis Ababa with the French Red Sea port of Djibouti. Arms supplied by the French and British allowed Ethiopian forces to blunt this initial Italian attack at Adwa in 1896, the first time a modern African army defeated a substantial European force. Forty years later, Fascist Italian forces tried again, invading from their colonies in Eritrea and Somaliland in order to include all Ethiopia in Greater Italian Somalia and force Menelik’s successor, Emperor Selassie into temporary exile. This exile lasted until 1941, but his return was brought about by British colonial troops from Africa and India who combined with Ethiopians to expel the Italians.

His credentials as a “modernizer” are also suspect. Haile Selassie, the hero of Ethiopian liberation, finally abolished slavery in law only in the thirteenth year of his reign in 1942. Actual freedom through official enforcement took even longer. The push to abolish slavery came both from without and within. Europeans had preached against slavery since the previous century, both for reasons of morality and for economic efficiency, while Menelik and later Haile Selassie, both themselves owners of a vast number of slaves, sought to undercut the autonomy of slave-owning landlords who contested the centralizing power of the national state.

The British were not completely disinterested when they came to Ethiopia’s aid. They hoped to include it as another colony in their African empire. But history was against them. The crushing death and destruction of World War II and rising nationalism all over the British Empire brought about the demise of the British Empire and colonialism in general as well as the rise of the United States and the Soviet Union as world powers.

Haile Selassie was acclaimed for finally abolishing slavery and for continuing to play off the great powers against each other to maintain national sovereignty. By the 1960s he was the longest-serving head of state, accorded great international prestige. At home, however, the slowness of reform provoked a military revolt that deposed him in 1974. He died (or was assassinated) the next year.

The country he left behind had retained its sovereignty and national territory, except for Eritrea, which would finally gain its independence in 1993 after a thirty-year war. But the secret of success had been to initially strengthen the power of landlords, the church, and the army at the expense of the peasantry. Modern economic institutions slowly entered the country and the export sector showed signs of life. Coffee, in particular, became the country’s international lifeline as it was responsible for most of the country’s exports. As would later occur in other coffee-growing areas in Africa, the Americas, and Asia, coffee initially brought modernization with very slow change. Despite promises of abolition of slavery, Menelik had struck up alliances with aristocrats, strengthening and institutionalizing feudalism while maintaining slavery. Amhara military officers, aristocrats, and church officials were given control over Kaffe, Oromia, Sidamo, and other lands to the south. In place of the traditional communal land holdings that had long reigned, feudal tenant relations appeared. At least one-third of production was siphoned off as rent by the parasitic landowners, church officials, and government administrators, who had little incentive to increase most agricultural productivity. Neither the landowners nor the tenant farmers invested much in infrastructure. Coffee growing was largely small-scale subsistence agriculture with some semi-wild coffee trees on the margins. Historian David McClellan notes that a hybrid emerged: “Capitalism sprang forth where it was most useful and efficient but was utilized within an updated feudal structure.” This was still true when Haile Selassie was overthrown after forty years of rule when the country faced a horrific famine and still recorded remarkably low health and education statistics. Although in appearance Ethiopia seemed strikingly different from colonized Africa, in fact, the participation of European colonial powers and the results for Ethiopia’s people were not much different. The world economy had been unkind to the people of Ethiopia.

5.11 Never Again: The Saga of the Rosenfelders Before corporations, partnerships were the premier form of business organization. Blood ties, rather than impersonal stocks, bound together enterprises that traversed the continents. Often ethnic groups viewed as “outsiders” by the majority population formed closed communities that specialized in specific trades. Their outsider status allowed them to move between different national groups, but also made them vulnerable to nationalist and racist attacks.

Take, for example, the Jewish trading house of Samuel Rosenfelder und Sohn that was centered in the fur capital of Europe: Leipzig. The company was founded by Samuel Rosenfelder, who was born in the 1820s in Nordlingen, Germany. Beginning as a small-time peddler, he woke up before three o’clock each morning to travel out to the surrounding farms to deal with farmers before they left for their fields. He bought their surplus cattle hides and whatever other skins they offered and then sold them to factories. Since the farmers mostly raised animals and grew food for their own subsistence, each stop garnered few skins—if any at all. Samuel eked out a living. He continued, to the end of his days, to be extremely thrifty. He took third-class trains, lived in a small apartment, and rather than rent an office, operated his business in the street.

In the middle of the century, Samuel took a gamble and moved to Leipzig. There he peeked into the world of the international fur trade. In the days before synthetic materials and efficient heating, when mink coats and beaver hats were still in fashion, there was a large market for the most varied types of furs and skins. Many exotic animals were still trapped, though there was a movement toward raising animals for their furs. The natural distribution of furbearing animals meant that each country specialized in different furs, encouraging international trade.

At the Great Leipzig Trade Fair, Samuel met traders from all over Europe. Personal connections he made there permitted him credit in other markets. So he sent abroad a representative—his son Max, who would become heir to the Leipzig company. His other son, Adolf, moved to Paris and established his own fur company, which continued to have trading relations with the German firm. (As we shall see, family ties were as much a centrifugal force as a magnet.) The Great Fair at Novgorod in Russia offered fox, martin, weasel, and sable furs for luxurious coats. In Ismir, Turkey, Samuel bought thousands of cat skins (reputed to cure rheumatism) and dog skins for gloves. Rabbit skins came from Italy, Spain, Australia, and Argentina.

Initially, Rosenfelder was simply a middleman between producer and manufacturer. Since the fur and skin businesses were so subject to the fortunes of fashion, climate, and disease, he made most of his profit by hoarding and waiting for price rises rather than establishing an efficient high-volume, low- markup business. Sometimes this strategy was quite successful. In the 1920s the company made a fortune by buying up monkey skins in Africa, which suddenly came into demand.

Gradually, his firm began cleaning furs and sorting and tanning skins as well, employing a dozen people in these jobs. But the company continued to be principally a middle-sized trading house. By the early twentieth century the core of the company was Max and his three sons, Felix, Gustav, and Eugene. At an early age they took up the job of visiting trade fairs throughout Europe. Then there was a falling-out. The three sons created their own firm, though customers must have been confused because they gave it the same Rosenfelder name as the original. Gustav maintained his ties to Rosenfelder und Sohn, but from a distance. In the 1920s he traveled to Argentina, where he invested in rabbit and paca (a large South American rodent), then moved to Danbury, Connecticut, then the largest hat producer in the country. (A large sign outside of town boasted “Danbury Crowns All.”) There he set up his own company. He branched out from the furs to the hair business, establishing the Federal Fur Company. He sold leftover animal hairs, which were spun together with wool for expensive clothes. Gustav Rogger, a relative by marriage, opened a branch in London in 1931, turned it over to his son Walter, and returned to Leipzig.

The company had sometimes prospered when crises struck Europe. During World War I, for instance, Rosenfelder made out handsomely, selling Russian lamb and sheepskins to the German wehrmacht. But the war also divided the family. Brother Adolf in France, who had married into the French aristocracy and hidden his Semitic background, fought for the French, while Max supported the German army. The two brothers would not speak for years after the war.

This was a minor problem compared with the crisis the company faced when the Nazis came to power in Germany. Aware of the threat that the Nazis presented to Jews, Felix left for the United States (Eugene had already died) and charged their relative Gustav Rogger with getting the company’s assets out of Germany. This was no small feat since Jews were prohibited from taking money from Germany. Rogger was to send the best furs to Gustav Rosenfelder in the United States priced below value so the profits would accrue in the United States. Unfortunately, Rogger was not aware of the scheme; intent on making a profit, as any born trader would, he sent low-quality furs to the United States so he could show a greater return in Germany. Unfortunately, Rogger was sent to a concentration camp before he could liquidate assets.

Fortunately, the U.S. connection saved him. In an act of tremendous courage, company employee Joe Ackerman (himself Jewish) rented a large black car, prominently displayed an American flag in front, and brashly drove to the concentration camp, insisting on speaking with the commandant. His brass and self-assurance won him an audience. There his money freed Rogger, who eventually left for the United States. Rosenfelder und Sohn was no longer a German company. Family members fled to England, Israel, Sweden, Peru, Argentina, and the United States. The dispersion that business began was accelerated by racist politics.

Gustav Rosenfelder maintained his company for a few years after World War II, selling hair for felt to the Stetson Hat Company. But synthetics began to replace natural skins, and furs and hats faded from fashion. By the late 1940s the company sold out to competitors. There was one last effort to resurrect the family’s stake in the fur business. In 1947 two nephews of Gustav, Kurt and Fred Tschopik, bought into the Spencer Rabbit Company in Los Angeles. The firm slaughtered rabbits, selling dried skins and meat. But by 1953 the nephews, too, withdrew from the skin business, the first becoming a realtor and the second a university professor. Today, the descendants of Samuel Rosenfelder are spread over the globe; none maintains the business that occupied four generations over three continents. Rosenfelder und Sohn was swept apart by the tides of the international market and world history. The family and ethnic ties that for so long were valuable assets led to the demise of the family business and to the death of some family members. But we remember.