Published by EH.Net (November 2012)

Robert Lee, editor, Commerce and Culture: Nineteenth-Century Business Elites. Farnham, UK: Ashgate, 2011. xviii + 343 pp. $135 (hardcover), ISBN: 978-0-7546-6398-0

Reviewed for EH.Net by Robin Pearson, Department of History, University of Hull.

This collection of eleven essays on different aspects of mercantile culture in Europe, Asia and North America between the late eighteenth and the early twentieth century originated in a conference hosted by the University of Liverpool in 2006, so it has experienced a lengthy germination. In an impressive overview of the historical and theoretical literature on urban and business elites around the globe, Robert Lee sets out the aspirations of the volume: to explore ?the role of business culture in determining commercial success,? and to examine ?the institutional and political framework for business operations.? Both themes, Lee suggests, provide ?a framework … for reassessing the applicability of established concepts and theories? (pp. 2-3). Some, though not all, of the contributions succeed in this goal.

The most successful chapter in this regard is Andrew Popp?s study of the Wolverhampton hardware factors, Shaw and Crane, who established their own merchant house in Calcutta in 1834, after several years of trading with India. Popp shows how the partnership came to take this ?buccaneering? decision to invest directly abroad. The move was based upon the firm?s own proven internal capabilities to manage credit and supply chains, and on the external resources acquired through a network of correspondents. Popp argues that while the chain theory of multinational enterprise (MNE) shows how a firm can expand abroad through incremental decision-making and learning through routines, networking could allow a firm to overcome the barriers to diversification inherent in those routines. Thus Popp?s chapter provides a fusion of MNE and networking theory that has wider lessons for business historians.

The remaining chapters are interesting and scholarly, although they are less successful in plowing new theoretical ground. Michael Nix describes the history of the Australian Company, the first joint-stock shipping company to trade regularly between the UK and Australia. The company?s collapse in 1830 is attributed to principal-agent problems at the Australian end of its operations. Christof Dejung examines the Swiss Volkart Brothers in India and China between the 1860s and 1920s. The Volkarts established commercial networks with indigenous middlemen in order to embed their transactions in the local market. The decisive factor for long-run success, however, was the stability of legal and political institutions. When these broke down in China during the 1920s and 1930s, it destroyed the firm?s business there. Jessica Lepler reconstructs the response of business elites in New York to the financial panic of 1837. She tells the story of a national ?leadership crisis?: how a small group of businessmen assessed the creditworthiness of their peers; how they tried to revive confidence by reaching out to other elite figures outside their circle; and how a fear of downward social mobility was their motivation. The crisis, Lepler argues, led to a ?commodification of confidence,? manifested in the new credit rating bureaus that began to appear in the following years.

Ikaros Madouvalos examines the operations of the Manos family, who emigrated from Macedonia to Pest at the end of the eighteenth century, and traded in commodities, coins and bills of exchange from the Balkans. Place of origin, religious identity, marriage alliances and membership of social associations together cemented the Pest diaspora network in which the Manos family was embedded. Their success was measured by the huge intergenerational increase in wealth and by the diversification of its assets out of trade into real estate. Lars Maischak shows with the case of Friedrich Keutgen, Bremen?s consul in New York between 1859 and 1861, how entrenched cultural attitudes among a merchant community could lag behind the demands of economic change. Keutgen and his partners extended their activities beyond those of the traditional Bremen merchants and his selection as consul was a triumph over their conservative politics of personal and family connections. Bankruptcy and scandal, however, ruined him in 1861. Elena Apkarimova looks at the role of merchants in the public life of provincial towns in the Urals between the 1860s and the 1900s, and concludes that their prominence was a product of corporatist traditions and the slow development of civil society there.

Margrit Schulte Beerb?hl argues that among German merchants in London in the eighteenth and early nineteenth centuries godparents were chosen with family business strategies in mind, so that ?spiritual kinship? was used to strengthen commercial relations. Lesley Doig examines eighteenth-century Salem, Massachusetts, where successive marriage alliances between two merchant families, the Derbys and the Crowninshields, fortified their business networks. Attitudes to marriage, however, shifted after the revolution, to meet a new generation?s expectations of friendship, love and reciprocity. Examples from both families of divorce and business failure demonstrate that by the 1800s marriage could no longer be relied upon as a basis for developing collaborative business ventures. In the final chapter, Crosbie Smith describes the early technological difficulties experienced by transatlantic steam shipping. He argues that Samuel Cunard restored passenger confidence by pressing his captains and crews with moral injunctions to enforce discipline and efficiency in their operations. Smith attributes this to Cunard?s own evangelical beliefs, in which steamship technology was evidence of God?s desire to bend nature to the will of man. It is an interesting reading, but it places a heavy burden on Cunard?s theology to explain the superior performance of his line.

In short, one finds ?culture? in a variety of guises everywhere in this volume, but its causal effect on business performance is hard to identify, even in specific instances, let alone in general contexts, and this may be a matter of frustration for economic historians picking up this book. One conclusion may be reasonably drawn from some of the chapters, as Lee points out in his introduction (p. 34), namely that trust relations based on family, religious and ethnic ties in some places and at some times could help to maximize trading opportunities for merchants and lead to efficiency gains. More interesting, perhaps, is the suggestion in other chapters that the institutional and cultural environment in which merchants operated could change, sometimes rapidly, and that in such circumstances business success could depend on the ability to draw upon a variety of connections, often outside merchants? existing networks or personal ties. Indeed one result evident in some of the essays, but generally underexplored in the volume as a whole, is that the weakness of strong ties can lock entrepreneurs into relatively closed elite communities, impermeable to outside influences. The barriers to commerce caused by cultural and personal affinities during periods of rapid economic growth, however, may be a research agenda for another day.?

Robin Pearson is Professor of Economic History at the University of Hull, UK. He has written extensively on the history of insurance, business networks, social capital and corporate governance in journals such as the Economic History Review, Business History and Business History Review. His most recent book, co-authored with Mark Freeman and James Taylor, is Shareholder Democracies? Corporate Governance in Britain and Ireland before 1850 (University of Chicago Press, 2012).

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