Book Review: So Great a Proffit

Winston Du – America’s First Open Market

Book: So Great a Proffit: How the East Indies Trade Transformed Anglo-American Capitalism by James R. Fichter, (Cambridge, MA: Harvard University Press, 2010.) Pp. 400.

When one imagines the United States in the year 1800, one certainly does not imagine the global power the country is today. The country was at the time, after all, a set of backwater colonies of England’s that had only quite recently gained independence. It was not fabulously rich either, being only tangentially involved in the Anglo-Spanish-dominated, lucrative Triangular Trade of rum, sugar, and slaves in the Caribbean. Both of the young nation’s political parties generally looked inward when it came to policy matters. The Federalists, led by Alexander Hamilton, considered the development of domestic manufactures of utmost priority. They handed out subsidies through the Society for Useful Manufactures and to a certain extent pushed for commerce-limiting tariffs that kept other countries out.[1] The Republicans, meanwhile supportive of free trade, nonetheless viewed international commerce as merely a way to sell more of the nation’s main product at the time: agricultural produce. When a debate raged in 1799 regarding whether the country should raise funds for a larger navy, a leading Congressional Republican, Albert Gallatin, argued that only “so far [as] the interests of commerce and agriculture are the same… he would agree to protect it.”[2]

Yet an important fact that is often forgotten in popular memory of American history, but inherent to the arguments of both sides, was the extent of US commerce. Hamilton and his fellow Federalists’ industrialization efforts were predicated on solving a problem: the gross imbalance of trade between America and the Old World.[3] Meanwhile, Congressman Gallatin’s own argument gave evidence that “more than one-half of the commerce of this country does not consist of our produce…but of a sort of extraneous staple.”[4] Indeed, American merchants had become significant players in the world trade economy by the end of the first decade of the nineteenth century. This was also the case, surprisingly, at a place halfway across the world: the East Indies (Southeast Asia today). As Historian James Fichter illustrates in his book So Great a Proffit, American trade in the East Indies was not only voluminous, eclipsing that of almost every other western nation, but also historically significant. The success of these American merchants far from home, Fichter argues, profoundly shaped not only the political economy of the merchant’s own nation, but also that of America’s former mother country – Great Britain.

Fichter begins his tale with the Boston Tea Party, a revolutionary act that Fichter argues foreshadowed the significance Asian trade would have to the future nation. For tea, a strictly Asian commodity, to play a part in igniting a revolution on the North American continent, was a powerful statement of global commerce at the time for. Indeed, tea was so widespread that it was consumed at almost every level of American society, including poorhouses.[5] Fichter catalogues how, as the flames of revolution spread, so did public tea burnings. Tea became a political evil in the colonies, and colonists caught with tea became ridiculed (if not outright assaulted) by their fellow countrymen.[6]

File:Boston Tea Party-Cooper.jpgW.D. Cooper. “Boston Tea Party.”, The History of North America. London: E. Newbury, 1789.
(Source: Wikimedia Public Domain, Original from Rare Book and Special Collections Division,
Library of Congress 40)

While at face value the Boston Tea Party (and its later copycats across the Colonies) constituted blatant destruction of property and mob rule, Fichter believes the colonists’ violent actions to be paradoxically disciplined and pinpointed: the mob was careful “not to damage any other cargoes in Boston Harbor,” Fichter writes.[7] The Boston Tea Party was about tea, and tea only. Tea was the main monopolized commodity in the colonies, and that was why it was offensive. In the view of American colonists borne of the English liberalism tradition, the fact that the British East India Company had a complete monopoly over tea meant their rights were being infringed. Moreover, the Company’s iron rule in Bengal fed colonists’ fears of tyranny, with one town in Connecticut condemning the Company’s “murder” or apparently “millions by sword.”[8] In the lens of the anti-monopolizing spirit then, the Boston Tea Party, in Fichter’s view, constituted the first American salvo against the monopolizing fetters of the British East India Company.

This was the beginning of a war that American free trade would soon wage against British mercantilism right at the East India Company’s doorsteps, and a competition that constitutes the heart of So Great a Proffit. While Fichter spends a great deal of his monograph explaining the history of the East Indies trade (beginning with the first American ships such as the Massachusetts and Empress of China) and documenting the various commodities (Furs, Sandalwood, Opium, etc.) that played a part in intricacies of that trade, what he arrives at the end is the fact that the United States was slowly but surely accumulating market share.[9] Indeed, by 1805 the British East India Company was complaining that the Americans were making too much profit.[10] But even as American trade in the region expanded, Fichter writes, the United States held true to its revolutionary anti-monopolism values: it never established its own East India Company. Instead, anyone with the means could attempt such enterprises.[11]

Fichter documents three main reasons why American upstarts were so successful in challenging the British East India company for trading supremacy in the area. First, the American merchants “operated with less bureaucratic encumbrance.”[12] Because  of its charter, the East India Company was tasked with actually governing, which meant maintaining a navy, an army, and administering India. The fact the Company was a monopoly meant there were no incentives to cut costs even in obvious places, such as the overly ornate merchant fleet that projected British power but also drained company finances. Port calls for the large ships took months, driving up port fees. Meanwhile, American merchants nimbly kept port stays short with small ships that departed quickly.[13]

American neutrality gave American merchants a distinct advantage during an era when most of Europe was embroiled in Napoleon’s wars

Second, American neutrality gave American merchants a distinct advantage during an era when most of Europe was embroiled in Napoleon’s wars. Cemented by Jay’s Treaty[14], American neutrality and allowance of navigation was a huge boon at a time when the powerful British fleet cornered the seas, blockading France and brazenly stealing Danish ships, meaning neutral American shipping coming into European ports became a lifeline.[15] At the same time (halfway across the world), the British won sweeping naval battles in the East Indies, gaining control of every European port in India and “almost every colonial port in the broader Indo-Pacific region.”[16] Other European nations, especially the Dutch, were thus forced to hire American shipping for goods that traveled the region.[17] American merchants took over the abandoned French trading house in Canton, China, crying: “We raise the fortunes of the United States on the wreckage of France.”[18]

The final reason Fichter gives for why American merchants continued to outpace the East India company was simply the latter’s refusal to acknowledge it was, in today’s business language, losing market share. It refused to innovate, to adapt. It “quashed reformist sentiment,” planting false charges against an avid free trader in Parliament, David Scott. The Company was legitimately afraid it might fail in an open market, thus it hid behind its cloak of monopoly.[19] In accordance to protectionist instincts, the East India Company barred US ships returning from the East from porting in London, but did nothing to serve the other Western ports it thus diverted the US ships to. This meant Britain conceded “large portions of east-west traffic.”[20] Indeed, even Canada soon found itself drinking “American” tea.[21]

It is important to note that American shippers were rarely in direct competition with the East India Company. In the case of Indian cloth, for example, the Company focused on higher-end Indian cloth while the Americans expanded the market by selling cheap cloth to lower-end buyers.[22] However, the lesson was still clear to the British government: the East India Company monopoly was no longer a sensible statute if the Americans were beating the Company at its own game. Americans not only profited more percentage-wise – exporting from India 10% more than they imported between 1800 and 1805,[23] but also traded at a higher volume, buying more Indian goods than the Company did in 1806.[24]

Free traders, armed with the theory of Smith’s Wealth of Nations, were able to buttress their argument by pointing to American successes.[25] As merchants in Dublin, Ireland argued further, “all monopoly in trade has ultimately proved injurious.”[26] In what Fichter terms “the defining moment” of the British empire, Parliament reacted in 1813, ending the Company’s monopoly in India— it was “better that London’s coffers be filled rather than Washington’s with the duties.”[27] This was a free-trade experiment that had resoundingly successful results.[28] By abandoning mercantilism and redirecting its energies to fostering free-trade capitalism, Britain had launched itself into the trajectory towards an eminence it would retain for the rest of the nineteenth century.

As Fichter argues, besides their indirect contribution to Britain’s rise to global dominance, American Pacific merchants’ also had an impact on their own country that was more direct and tangible – their growth and profits. Fichter catalogues how,  due to the immense capital cost in America of financing voyages to India, American banking developed in tandem with the Asian trade, and that the banks involved exhibited similar traits to their later, modern successors.[29] Fichter also traces the contributions of retired East Indies merchants as the provider of the starting capital for the Boston Manufacturing Company, or more commonly known by its later name, the Lowell Mills.[30] In cataloguing the Lowell Mills’ success, Fichter attributes it to the East Indies experiences of its first managers.[31]

File:1850 Lowell Co Mills Lowell Massachusetts detail of map by Sidney and Neff BPL 11051.png
Sidney & Neff. Plan of the city of Lowell, Massachusetts, 1850.
(Source: Wikimedia Public Domain, Original from Boston Public Library, Leventhal Map Center)

For a book about what is about premodern trade, however, So Great a Proffit seems to reveal little the hazards such seafaring entailed despite its extensive documentation of the trade itself. In particular, the extent to which pirates roamed the East Indies trade routes is not addressed, despite the fact they were mentioned by Fichter as a risk of the trade.[32] Indeed, there were reasons why the East India Company chartered freight boats armed to the teeth, and waited for naval envoys before sailing. After all, East Indies cargo was valuable, as was the large amounts of silver, furs, and other goods that bought it. Only the wealthiest American merchants could afford even a majority stake in one East India voyage.[33] Despite this, American merchant ships were “vessels not calculated for defence, of little cost, very sparingly manned and equipped, sailing singly out … without waiting for convoy.”[34] One can imagine that, for every few ships that wildly profited their American financiers, there was another ship that was captured by hostile pirates. Whether this factor comes into play, Fichter does not say.

While Fichter convincingly argues his first point that American competition was crucial in undermining the East India Company, his second argument that the East Indies/Asia trade contributed capital necessary for industrialization does not hold as much weight in any scenario. East Indies trade was only part of an American commerce that included the West Indies and the Mediterranean. Moreover, as important as centralized American banking would become, for a good part of the nineteenth century it was still a system that served a backwater nation incredibly mistrustful of it (epitomized by Andrew Jackson’s bank veto). In a different vein, as symbolic as the Lowell Mills themselves may be to American industrialization, they were only just another group of factories in an America that would later welcome Andrew Carnegie’s steel, Pullman’s trains, and Rockefeller’s oil.

An argument regarding America that would perhaps hold more weight and thus warrant exploration, however, seems to elude Fichter’s notice. This would be the question of whether the success of these revolutionary-era American merchants in East Asia inspired the nation’s fantasies of its own future imperialist ambitions in the region. Though Fichter does document the initial publicity of the East Indies trade on the American psyche as one of prestige, full of the “romantic and mysterious,”[35] he misses the larger picture— even as he meticulously chronicles the trade itself during its heyday. Not even half a century would pass before Commodore Matthew Perry would sail forcefully with a fleet of ships into Japan in 1853, opening its markets to free trade by force to benefit the United States, which by then was quickly becoming a capitalist world power.

In summary, in So Great a Proffit Fichter provides irrefutable evidence of the extent of early American commerce in what was then called the East Indies – Southeast Asia. With scrupulous analysis and bold, sweeping arguments, Fichter documents the impacts of that commerce both near and far, short-term and long-term. Despite some shortcomings, the heart of his book lies intact: the small minority of fearless American merchants in the region contributed to formation of modern Anglo-American capitalism. For historians seeking to grasp at America’s role today in the East, So Great a Proffit provides an illuminating tale. 


Works Cited

  1. Annals of Congress, 5th Cong. 3rd Session, 2861-2862. Web. Accessed Feb. 5, 2017. (https://memory.loc.gov/cgibin/ampage?collId=llac&fileName=009/llac009.db&recNum=224)
  2. Fichter, James R.So Great a Proffit: How the East Indies Trade Transformed Anglo- American Capitalism. Cambridge, MA. Harvard University Press, 2010.
  3. McCoy, Drew R.The Elusive Republic: Political economy in Jeffersonian America. Chapel Hill, NC. UNC Press Books, 2012.

[1] Drew R. McCoy, The Elusive Republic: Political economy in Jeffersonian America (Chapel Hill: 2012),  151.

[2] Annals of Congress, 5th Cong. 3rd Session, 2861-2862.

[3] McCoy, 148.

[4] Annals, 2861.

[5] James R. Fichter, So Great a Proffit: How the East Indies Trade Transformed Anglo- American Capitalism.  (Cambridge, MA: 2010), 16.

[6] Fichter, Proffit. 15-16.

[7] Fichter, 18.

[8] Fichter, 20.

[9] Fichter, 46.

[10] Ibid, 184.

[11] Ibid, 27.

[12] Ibid, 197.

[13] Ibid, 193.

[14] Fichter, 176-177.

[15] Ibid, 58-59.

[16] Fichter, 63.

[17] Fichter, 152-153, 161, 176.

[18] Galabert, Mémoire sur l’Inde An 11, Centre d’accueil et de recherche des Archives nationales AF/IV/1211, Paris. As cited in Fichter, 207.

[19] Fichter, 196-197

[20] Ibid, 200.

[21] Ibid, 91.

[22] Fichter, 180-181.

[23] Ibid, 184.

[24] In 1806-1807 the United States and European nations bought “1,600,000 £” worth of goods from India, “whereas the imports of the Company for that year had been only 1,200,000 £.” Would not the £ 1.6 million “carried on as it was by Americans … have  been a considerable object to British subjects?”

April 9, 1813. Hansard Parliamentary Debates, 1st series (London: T.C. Hansard, 1803-1820). As cited in Fichter, 241.

[25] Fichter, 234.

[26] “A Petition of several Merchants and traders of the City of Dublin, was presented,” March 1, 1813,  Journal of the House of Commons, vol. 68 (1813), 274. As cited in Fichter, 235..

[27] Fichter, 249.

[28] Ibid, 251.

[29] Ibid, 264.

[30] Ibid.

[31] Fichter, 267.

[32] Ibid, 121.

[33] Ibid, 124.

[34] British Oriental and India Office Collection  H/494, 13-15, 87. As cited by Fichter, 203.

[35] Richard Henry Dana, Two Years before the Mast (New York: Airmont, 1965) 442-443. As cited by Fichter 107.

Book Review: So Great a Proffit
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