Chartered Companies, Africa

Chartered companies were companies that received certain rights and privileges under a special charter issued by the sovereign of a European state. This charter usually gave the company a nationally recognized trading monopoly for a specific geographic area and for specific trade items, and the right to use force to open and maintain trade. Dominant in the seventeenth and eighteenth centuries and from 1880 to 1900—the eras of mercantilism and of the "scramble for Africa," respectively—royally chartered companies proved to be indispensable tools for the opening of Africa to European commercial and imperial ambition.

As a way to defray government costs, European exploits in Africa from 1340 until 1900 were usually funded by high-risk venture capital in the form of royally chartered companies, the forerunners of the modern corporation. The crown provided political support and authorization for overseas business but the economic risks and military expenses were borne by private individuals and corporations. After 1600 large chartered companies like the Dutch West India Company, the Royal African Company, and the Portuguese Guinea Company created permanent strongholds on the coasts of Africa, though they had to form alliances with local African states in order to prosper. After 1870 the imperial ambitions of chartered companies like the British South Africa Company and the Royal Niger Company paved the way for Europe's formal colonization of most of the African continent.

CHARTERED COMPANIES IN THE AGE OF MERCANTILISM AND THE SLAVE TRADE, CA. 1450–1830

The European discovery of the Canary Islands off the west coast of Africa in the early 1330s prompted impoverished Spanish nobles, with financial backing from investors and royal charters from various monarchs, to organize repeated invasions of the islands until the final conquest of the native inhabitants in 1496 under a charter granted by the sovereign of Castile. The charter provided royal authorization for the invasion without costing the monarch any money. The invaders assumed governmental powers and were authorized to collect rent and taxes for themselves, their investors, and the monarch. Throughout their history chartered companies demonstrated that the relationship between entrepreneurship and violence was ever-present in the European engagement with Africa. While trade and profit were dominant elements in the exchanges between the two continents, state-sanctioned violence achieved far more than entrepreneurial activity could do alone.

Leaving the Canary Islands to the Spanish, the Portuguese established a fort at Elmina near the deltas of the Volta and Niger rivers in 1482 and became involved in the inter-African slave trade. Italian and Portuguese investors, excited by the strong European market for sugar, obtained charters from the Portuguese crown to develop sugar plantations on the islands of São Tomé Principe, and Fernando Po, which lay off the coast of tropical Africa. Unable to attract Europeans as a workforce, they relied on Portuguese connections with African commerce to supply African slave labor. In the year 1500, these islands became the first true plantation societies in the Atlantic.

By the mid-1500s Dutch, Flemish, and German capitalists had entered the sugar boom that had shifted to the Portuguese colony of Brazil. The famous Triangle Trade had begun: Africa imported European capital, manufactured goods, and weapons and exported labor in the form of slaves, while the plantation colonies in the Americas specialized in the mass production of a few tropical products (sugar, tobacco, cacao, coffee, and indigo) for the European market and imported capital, labor, and supplies. Chartered companies like the Portuguese Guinea Company and the Dutch West India Company became the main suppliers of African slaves to the New World in the sixteenth and seventeenth centuries respectively, whereas the English dominated the slave trade in the eighteenth century.

England and the Netherlands underwrote their colonial expansion between 1600 and 1800 by creating chartered joint-stock companies. These new types of chartered companies allowed larger amounts of capital to be raised; they separated stock ownership from management, and investors could sell stock instead of liquidating the firm periodically to retrieve assets and profits. In a hallmark of an emerging capitalist economy, the new chartered companies built up and reinvested their capital rather than redistributing all the invested capital and profits back to their owners after each voyage. In the tradition of earlier chartered companies, these new chartered companies were licensed to trade and to make war to promote trade. The Dutch and English chartered companies, following earlier Portuguese practice, tapped into indigenous trade networks and maintained relations with African states in Benin, Oyo, and Kongo. Their presence created a growing African market for European hardware, textiles, and weapons, for which Africans traded gold, ivory, and slaves.

These new chartered companies, like the Dutch West India Company (WIC; founded 1621), had a legal monopoly on imports from Africa back to the home country and a license to seek monopolies in other markets, using armed force if necessary. They maintained standing armies and forts in addition to carrying out routine business transactions. The Dutch state chartered the WIC to conduct economic warfare against Spain and Portugal by striking at their colonies in the Americas and on the west coast of Africa. The state granted the company a monopoly on Dutch trade in the Atlantic region between the Americas and Africa and empowered it to negotiate treaties and make war and peace with native rulers, appoint governors, and legislate in its territories. With military and financial support from the government, the WIC acquired ports on the west coast of Africa to supply slaves for plantations in the Americas. Because of intense Portuguese, English, and French competition, the WIC was never able to monopolize the supply of slaves from Africa. No chartered company ever was.

Most chartered companies lasted no more than a generation or two. The longest-lived in Africa was the Dutch East India Company, which founded a restocking station for its East India ships at the Cape of Good Hope in 1652. When the company dissolved in 1799, Cape Town formed the nucleus of European (Boer) settlement of the Cape Colony in South Africa. The second-longest-lived chartered company in Africa was the WIC (1621–1674), which folded due to debts incurred by long wars with the Portuguese and other European powers and the loss of key trading posts destroyed or captured by rival European nations. Parliament chartered the Royal African Company (RAC) in 1672 as the English slave-trading monopoly after a similar venture in the 1660s failed due to war with Holland. The monopoly was limited to London merchants, but merchants from Bristol and Liverpool lobbied successfully to have the monopoly charter ended by 1713—even though supporters of the monopoly argued that it ensured profits needed to build ships, maintain African trading settlements, and pay attractive dividends to shareholders, and that the highly advantageous trade between England and its colonies relied on the military protection of RAC forts on the coast of Africa. The RAC continued to engage in the slave trade, however, until 1731.

Europe and Africa were changed by the activities of chartered companies. The slave trade provided the kingdoms of coastal Africa with foreign exchange that soon exceeded their earnings from traditional exports like gold, pepper, ivory, and cotton cloth. As the Atlantic slave trade expanded from a few dozen slaves a year in the 1520s to ninety thousand a year in the 1780s, it allowed African elites on the Atlantic coast to buy European ironware, luxury goods, textiles, and weapons (to the tune of thousands of muskets a year in the 1780s). This trade, facilitated by European chartered companies, did not undermine African independence so much as it changed the balance of power between African states. The great empires of the interior grasslands like Mali and Songhay lost revenue and began to disintegrate when trade was diverted to the Atlantic kingdoms of Benin, Oyo, and Kongo, which became richer and acquired new military technology. The economies of interior states weakened as families and work were disrupted by massive forced abductions of people. Initially Africa's Atlantic trade was a reciprocal exchange of commodities, but soon that exchange was overshadowed by the slave trade. An estimated ten to eleven million Africans were sent to the Americas as slaves between 1443 and 1870 by chartered companies and millions more died on the forced marches to the coastal ports.

Europe was also caught up in the transformations wrought by chartered companies. Europeans controlled each leg of the Triangle Trade and enormous wealth was consolidated by European investors as a result. That control was fostered by chartered companies and the economic ideas of mercantilism they embodied. Mercantilism held that there was a fixed amount of wealth in the world, measured by possession of gold and silver, and that each country had to fight to obtain as large a share of this wealth as possible, aided by government policies that limited imports and promoted exports to create a favorable balance of payments. Economics was war by other means: Colonies and fortified trading stations existed to provide revenue for the mother country and to ensure that the trade was as monopolistic as possible, in order to keep gold and silver at home. Competing and aggressive chartered companies could not maintain secure monopolies, but the transfer of credit and profits around the world that they facilitated was a major step in the rise of a modern capitalist world economy. As the costs of war making soared in the eighteenth century, however, British and Dutch chartered companies staggered under the burden and they were all bankrupted by the 1830s: they did not outlast Britain's abolition of the Atlantic slave trade in 1807 and of slavery in 1833.

CHARTERED COMPANIES AND THE NEW IMPERIALISM, 1880–1924

After a brief hiatus, chartered companies were once again the vanguard and spur of imperial ambition when Europeans took direct control of Africa after 1880. Europeans colonized Africa under the impetus of the Long Depression (1873–1896), a world economic crisis that sparked the creation of monopolies and cartels and new colonial empires and monopoly trading relations in Africa as ways to stabilize the profitability of the new industrial capitalism. Chartered companies played a vital role in these territorial annexations and in the securing of sources of raw materials and valuable minerals for European nations.

The rise of Germany, Belgium, and Italy as industrial powers after 1870 accelerated the tempo of colonial growth as these nations sought protected markets and sources of raw materials for their industries in a depressed world economy. Britain, fearing these new colonial challengers, joined the colonial scramble in Africa. Belgium's claim to the Congo River basin and Germany's annexationist activities on the west and east coasts of Africa prompted a conference in Berlin in 1884 to lay out ground rules for annexations. Article 35 of the Berlin Act stated that a mere claim to territory was not enough for international recognition of a colony. Under the doctrine of "effective occupation" the colonizer had to prove that it had authority over a colony, and thus European monarchs turned to chartered companies to ensure effective economic and political occupation. This new political climate induced the Portuguese to set up chartered companies like the Companhia de Boror to secure their four-hundred-year-old claim to Mozambique.

After the Berlin Conference, Britain concentrated its colonizing efforts on the Niger and southern African regions (the centers of its commercial activity in Africa) and on Kenya, France focused on the area between Senegal and Lake Chad, and Germany sent chartered companies to Togo, Cameroon, South-West Africa, and Tanganyika. The most effective and successful chartered companies were British, such as the Royal Niger Company and the British South Africa Company. They secured Britain's empire in Africa.

Building on the commercial ideas of George Goldie (1846–1925), the Royal Niger Company (RNC), chartered in 1886, amalgamated British business interests in the lower Niger region. Its charter of incorporation authorized it to administer the Niger delta and the country along the banks of the Niger and Benue Rivers. Palm oil was a major export and the main imports were cloth and alcoholic beverages. The company secured its monopoly of trade in the area of present-day Nigeria against French and German competitors by concluding treaties, some of doubtful legality, with local rulers. In negotiations with the French and German governments Goldie set the boundaries of the British sphere of influence. The establishment of trading stations in the interior, contrary to earlier agreements, resulted in African uprisings against the RNC in 1886 and 1895, which were put down with gunboats, the company's police force, and ships of the Royal Navy. The continuation of the RNC's commercial and territorial disputes with France and the continuing complaints of local peoples against the company caused the British government to revoke the company's charter in 1899, but by then Britain had effectively occupied the lower Niger region.

Another British commercial adventurer, Cecil Rhodes (1853–1902), received a charter for the South Africa Company (SAC) in 1889 with the object of acquiring and exercising commercial and administrative rights in south central Africa. The charter, initially granted for twenty-five years, gave the company rights to make treaties, promulgate laws, acquire economic concessions, establish a police force, and provide, at the company's expense, the infrastructure of a new colony initially in Matabeleland (now part of Zimbabwe) but extending as far as current-day Zambia, Malawi, and Botswana. Mineral wealth (gold and diamonds), communications (a Cape-to-Cairo railroad), and white settlement were Rhodes's objectives. Gold and diamond mining was the company's main business and by 1900 SAC was administering Southern and Northern Rhodesia. Company rule ended in Southern Rhodesia (now Zimbabwe) in 1923, when partial self-rule for whites was implemented; in Northern Rhodesia (now Zambia) it ended in 1924, when the Colonial Office assumed control. By then, the activities of the SAC had secured British control and claims on this area of southern Africa.

In the final analysis, the development of the chartered joint-stock company, forerunner of the modern corporation, was instrumental in European commercial and colonial incursions into Africa. Chartered companies in Africa aided the emergence of a European-centered global capitalism that required African labor, commerce, and colonies to thrive, but which took more from Africa than it gave in return.

see also Cape Colony and Cape Town; Dutch United East India Company; Dutch West India Company; English East India Company (EIC).

BIBLIOGRAPHY

Hobsbawm, E. J. The Age of Empire, 1875–1914. New York: Vintage, 1989.

Pomeranz, Kenneth, and Steven Topik. The World That Trade Created: Society, Culture, and the World Economy, 1400 to the Present. Armonk, NY: M. E. Sharpe, 1999.

Ringrose, David R. Expansion and Global Interaction, 1200–1700. New York: Longman, 2001.