A free market? The French East India Company and modern capitalism

“Paris is the place to make money, & England is the country to enjoy it.”

With what we think we know about capitalism in England and France circa 1790—a year into the tumult of the French Revolution and as the territorial expanse of the gargantuan British East India Company continued to wax in Asia—it is hard to fathom how exactly, a banker based in London (albeit one of French ancestry) could have come to this conclusion as he wrote to a friend, one of the directors of the much smaller French East India Company, or Compagnie des Indes. 

Our twenty-first-century business history textbooks and op-eds tell a different story: that we should think of the British East India Company as the first modern multinational corporation, an ancestor of Amazon or Google. Like the corporate giants of the present, scholars often identify the British and Dutch East India Companies as architects of Western political and economic dominance, having built the modern world through their imperial exploits, conquests, market power, and exploitation of labor. Uncomfortably straddling the boundaries between the political and the financial, these “company-states” were both self-governing, profit-driven enterprises, but also political bodies that built and governed territorial empires of their own.

But neither journalists nor scholars pay much attention to one crucial element of the story: that the British and Dutch companies inspired a long suite of both imitators and competitors across a European continent thirsty for the exploitation of colonial trade. In the Atlantic world, settlement and slave trading companies populated the Americas with migrants both free and enslaved. In the Indian Ocean, European states competed against one another for access to lucrative markets for spices, Indian cotton goods, and Chinese silks and porcelain. Among the corporate entrants to this competition in the long eighteenth-century numbered Prussian, Austrian, Swedish, and Danish East India companies, among many more—companies that were often financially precarious, short-lived, and whose politics and operations remain largely unknown and unstudied.

This characterization curiously applies to the early modern trading companies of what was ultimately one of the most significant European global empires: France. In its three successive incarnations, the French East India Company earned a not entirely undeserved reputation for scandal, financial crisis, and institutional turmoil. Modern historians must reckon with the fruits of that turmoil: unlike its British and Dutch counterparts, whose archives are largely consolidated in major collections in London and the Hague, the papers of the three French companies are fragmented and scattered across different repositories throughout the country. The fact that royal ministers meddled so deliberately and repeatedly in the politics of the Compagnies des Indes hardly makes them desirable forebears for modern corporations beholden to the whims of their shareholders.

Yet the French East India Companies were major imperial and capitalist actors in their time. It was, after all, direct rivalry and competition between the British and French East India Companies that drove the establishment of British dominion in India in the decades after the global Seven Years’ War (1754–1763). This military consolidation came at a tremendous cost to the British company, whose repeated bouts of financial insolvency became a critical subject of parliamentary scrutiny in the decades to follow. At the same time, the defeated French had to invent new ways to secure access to coveted Indian goods and markets now controlled by the British, while still maintaining fragile diplomatic ties with independent South Asian powers who remained key geopolitical allies against a common enemy.

The final iteration of the French East India Company—lasting only from 1785 to 1793—emerged from this moment of mutual crisis between these rival imperial powers that drove a rethinking of the relationship between empire and business. By the late eighteenth-century, the “company-state” system was breaking down: exploitative and extractive as empire was, the costs of policing and governing territories were enormous, and private companies were proving ill-adapted to govern and trade simultaneously. In 1773, Voltaire called the defeated and bankrupt French company “a two-headed cadaver that conducted war & commerce equally badly”—a sentiment matched by the opprobrium towards its British counterpart articulated by Adam Smith in his 1776 The Wealth of Nations. Companies made poor sovereigns, and states had to take responsibility, one way or another, for what their company-states had wrought.

One solution was to put the company under an elaborate regulatory framework, and in the decades after the Seven Years’ War, this is exactly what happened with the British East India Company, which progressively became a centralized state bureaucracy of its own, to the chagrin of its capitalist investors.By contrast, the French government—both under the Bourbon monarchy and during the early years of the Revolution—pursued a deregulation of their new company.  As the cost of empire in South Asia led French officials to scale back their military presence, they envisioned an informal empire for France instead, where a “purely commercial” company would maintain trading relationships with both Britain and key Indian states, like the kingdom of Mysore.

This vision of informal, commercial power progressively led French company shareholders to fight for their own rights as investors and to demand even greater independence from the state. Their corporate activism unfolded amid some of the greatest economic and political turmoil in French history, with the coming of the French Revolution—and yet, offered a decidedly alluring alternative to the rigid, parliamentary framework being imposed on the reluctant shareholders of their British counterpart. The reimagined French East India Company, though short-lived, offered a model of what a private company free from the regulations of royal or parliamentary charters might look like. Despite what we think we know about the British East India Company and the making of modern capitalism, there was money to be made in Paris, too. 

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_{Featured image: “Hindoustan” by Pierre-Antoine Mongin (1807), via Wikimedia Commons, CC BY-SA 3.0}