The Fur Trade and the Evolution of the Managerial Capitalism: Chandler’s Modern Firm and the Problem of Imperialism

The following paper is an essay in the classic sense, meant to question and provoke rather than to summarize or solve. It is concerned with the curious absence of the fur trade from the canonical texts of American business history, and how the study of that trade might helpfully illuminate the manner in which the evolution of the modern business firm is entangled in historical processes that are not strictly economic. In the first part of this paper I will quickly summarize the accounts of American business history produced by Alfred Chandler and Thomas Cochran. Chandler, a giant whose shadow falls across the entire historiography of the field, and Cochran, who has provided the most influential alternative to Chandler, both explain the development of the firm in terms of its role in a national history.[1] It is this preoccupation with national history that is likely the reason for the absence of the fur trade from their oeuvres. That trade after all, was conducted not simply across borders but across frontiers, and among communities that had not yet been incorporated into national polities. Nonetheless, the North American fur trade was a veritable laboratory of organizational experimentation that deserves more attention from business historians than it has received. In the second part of this paper I will outline the history of the business firm in the fur trade and sketch out how a Chandlerian analysis of that history, and a Cochranist response, might look. I will argue that both approaches can be enriched by paying closer attention to the role gender, class and race played in business organization, and the role business organization played in European and American imperialism in North America.[2]

Part I: Business History and the Invisible Fur Trade

Chandler: Speed, Scope and Scale

Alfred Chandler’s career was dedicated to understanding the rise to prominence in the late nineteenth century of the large, multi-divisional firm, and the emergence of a class of salaried managers who oversaw its functioning. Chandler argued that prior to the 1840s most firms were small, family run operations that were managed by their owners. In his view even massive international monopolies such as the Hudson’s Bay Company (HBC) and the East India Company, what he called “those giants of an earlier capitalism,” could not match the organizational sophistication on which the industrial enterprise of the modern era depended.[3] In the latter half of the nineteenth century however an institution that had remained largely unchanged for hundreds of years evolved – the metaphor is a favorite of Chandler’s – into its modern, and characteristically American form. The traditional single-unit business of the earlier age continued, and continues, to operate along side its titanic cousin, but in certain key economic sectors it simply could not compete with the economies of scale that the big firms could bring to bear on the market. In those sectors, predominantly heavy industry and manufacture, the small firm became extinct.

In The Visible Hand, his classic history of American business, Chandler argues that during the late eighteenth and early nineteenth centuries the American population grew at a bewildering rate and, consequently, so did the total volume of goods produced, distributed, and exchanged, across the continent. As the economy expanded the number of traditional single-unit businesses also increased, as did their degree of specialization. But the organizational form of these business enterprises remained essentially the same. Until, that is, the 1850s when a series of technological breakthroughs was exploited by opportunistic businessmen to transform the economic landscape of not just the United States, but the world.[4] If Britain’s industrial revolution had been fueled by the application of coal power to processes of production, a second American industrial revolution was made possible by the communication and transport networks of the telegraph, the steamship, and the rail road.

The influence of these new technologies was two fold. The first and most obvious of their effects was that merchants who had once relied on sail and animal transport were no longer dependent on capricious winds or plodding animals, but could move goods and information about the country with astonishing speed and regularity. The second, and equally important effect, was organizational innovation. The capital required to build and run a railroad greatly exceeded that needed to run any other business enterprise of the period. The usual arrangements of the day – single entrepreneur, family, or small group ownership – were simply incapable of generating the necessary funds and so the railroad men became adept at attracting outside capital. And once built the speed, scope, and scale of the railroads meant their day-to-day activities had to be carefully managed and coordinated by on-site experts. Hence, aside from raising and allocating capital, and in the hiring of top managers, the ownership of the railroads had little real say in the industries actual operations. A degree of separation between ownership and management occurred during these early years of the railroad that was radically new.

These two developments – the speed and reliability of the railroad as a form of transport, and the separation of ownership from professional management – were, in that order, the necessary and sufficient causes for Chandler’s second industrial revolution. Business men could now anticipate and co-ordinate the shipping of raw material into their plants, and of product out, in previously unimaginable volumes. When such improvements in shipping were combined with new machine technologies on the factory floors, the access to a mass market rail roads provided, the organizational expertise of the new managerial class, and a booming capital market, you had an explosion in productivity, or what Chandler calls “throughput.”[5] To maintain a high rate of throughput however, these companies had to find ways to ensure both a steady supply of raw materials, and access to reliable distribution networks. And this is the moment in which the modern business enterprise as gigantic firm is born. So long as manufacturers relied on other firms for supply and distribution they were at the mercy of unpredictable market forces. By the 1880s firms were seeking to manage those forces through vertical integration. Autonomous single-unit firms were incorporated into large, multi-unit enterprises, and transactions that had once occurred in the open market were now managed internally. In certain key sectors of the economy, such as manufacture, small-time players who could not make the transition from the traditional single-unit firm to the highly capitalized, vertically-integrated, multidivisional enterprise were, in Chandler’s view, doomed. The invisible hand of the market had been replaced by visible hand of the manager.

Cochran: Culture, Context and Contingency

Thomas C. Cochran provides us with an alternative model for understanding the history of American business. For Cochran big business wasn’t an inevitable development of economic growth and technological development, but a dangerous social phenomenon. Like Chandler, Cochran tried to disrupt the business historian’s traditional fixation with entrepreneurial greatness, and to instead analyze the pre-conditions and limits of business practice. Unlike Chandler he identified the origins of American industrialism with the artisan, not the manager, and he did not celebrate the rise of big business and managerial capitalism, but regretted it.

In 1942, long before Chandler transformed the field, Cochran and his co-author William Miller argued in The Age of Enterprise: A Social History of Industrial America, that market forces were not the key to understanding American business history. What was much more important was the interplay of politics, culture and geographic context. They identified the century following the American Revolution as a golden age of industry and enterprise. The Revolution had swept away mercantile restrictions on the market and opened it to competition, but what drove that competition was the experimental and ambitious character of the American individual, and the incomparable resources of the continent at his disposal.[6] Towards the end of the nineteenth century however, over-production glutted markets, prices fell, and profits diminished. The big industrialists began to form pools and trusts, to curtail production, and to partition markets. By World War I the most profitable sectors of the economy were controlled by those industrialists who had access to investment capital, and the control of that capital was concentrated in very few hands. In Cochran and Miller’s account, written as it was in the years following the Great Depression, those hands had come very close to squeezing the life out of American enterprise and the free market economy.

Almost forty years later in Frontiers of Change: Early Industrialism in America, Cochran revisited this argument and, despite the intervening years and Chandler’s reinvention of business history, it remained essentially unchanged. While Cochran acknowledged a long list of contributing factors he continued to identify the ultimate origin of American industrialism as the proclivity of the all-purpose artisan for pragmatic experimentation. Cochran’s artisan is sort of Weberian ideal-type, one produced by the transfer of British culture to North America. A set of shared outlooks and attitudes drove the early pioneers of American industry to exploit the abundant resources of the New World with unrelenting energy. Their vigorous economic improvisations and political machinations resulted in the legislative and technological infrastructure which made Cochran’s golden age possible. His argument, in nutshell, was that British character, minus mercantilist restraints, plus North American geography, equals American industrialization.

Cochran breaks his history of American industrialization into three stages. The earliest stage runs from 1785 until 1825. In this period American ingenuity was combined with British technology to create new business opportunities. In Cochran’s views the great achievements of this period were in those industries that exploited particularly American resources – in his words “success came from the drives of American culture operating on a new frontier rather than from the diffusion of Old World technology.”[7] By 1825 the revolutionary phase of American industrialization was already over, and what followed next was simply economic development along the tracks that culture had laid.[8] The key events of this period were attempts to establish a transportation infrastructure of canals and turnpikes, banking policies that would stimulate capital investment, and a growing interdependence of rural agricultural and urban manufacture. By the 1840s the United States had become a fully industrialized nation capable of producing its own wealth. The final stage of Cochran’s history of early American industrialism lasts until the end of the railroad boom of the mid-1850s. The U.S. economy was still predominantly agricultural during this period but, according to Cochran, the Americans had caught up with the advanced nations of Western Europe and were “on the frontier of technological change,” and the shock troops of this revolutionary change were the railroad men.[9]

For Cochran, as for Chandler, the railways provided more than a new mode of transportation – they also created new business practices and managerial structures.[10] But unlike Chandler, for Cochran the new business forms that the railroads made possible were as much an ethical and cultural challenge for the young nation as they were an opportunity. In his view “the optimistic, competitive temperament of American entrepreneurs” was best suited to small- and medium-sized firms.[11] Such firms depend on the practical experience, independence, and drive of their proprietors. But the big businesses that the railroads made possible were run by a different sort of man altogether. The managers and engineers who administered the railroads on behalf of the stockholders relied on book learning and theory rather than good-old American can-do, and were comfortable in the autocratic and hierarchical structure of the multi-unit corporation. The difference between the salaried-manager and the artisan-proprietor has, for Cochran, profound political and cultural consequences. Such concerns are entirely invisible in Chandler’s accounting of things. For Cochran it is the contrast, indeed the contradiction, between these two ideal-types that is crucial to understanding not only the history of American business in the twentieth century, but the history of the nation as a whole.

Despite their differences of interpretation Chandler and Cochran agree on the basic sequence of events and the centrality of the railroad to the history of American business. And their emphasis on the business owner and his agents means they also leave out the same people: women, African-Americans, immigrant labor, and the Native Americans across whose land the new nation sprawled. Their focus on industrialization as the key factor in the rise of both the modern business firm and the modern US also means both pay historians little attention to the mercantile activity that continued to bind all such people together into the same global economy.

The Fur Trade and Business History

Since the days when the North American fur trade first helped inspire the European colonization of the eastern seaboard, until the beginning of its decline at the end of the nineteenth century, it has been a veritable laboratory of institutional organization. It has seen a variety of royally chartered monopolies, joint-stock companies, independent operators, coalitions, partnerships, loose associations, petty peddlers and multi-national corporations all competing in the same market well into the twentieth century. Yet it is largely invisible in the canons of American business history.[12] This is perhaps not so surprising as it at first seems if we consider the nature of the national origins story that scholars such as Cochran and Chandler are telling. The story of the fur trade is, after all, as much one of mercantilism as it is of free trade, of Empires as of Republics, of natives as of colonists. It provides a distraction from, rather than a reinforcement of, the neatly argued arguments Chandler and Cochran are having about the origins of the American big business.

Yet there it sits, sprawling across the boundaries of national historiographies and disciplinary boundaries, and its awkward presence should not to be reduced to an interesting anachronism in a foot note. Particularly when we consider that Cochran explicitly, and Chandler implicitly, incorporate the wide open spaces of the American West, its resources, settlement and geography, into their accounts, and the fur trade is critical to understanding the events that took place there. The great industrial transformation of the continent depended on the railroad, the railroad in turn depended on imperialism and colonization, and the fur traders were the shock troops of the Atlantic empires. Cochran and Chandler may write as if spaces that the nineteenth-century technologies so spectacularly collapsed into a national economy were uninhabited, but that is a mistake no historian of the fur trade has ever managed to make, no matter how hard they tried. Organizational experimentation, in the fur trade at least, was not simply the product of a certain cultural or national genius as Cochran’s model would have it, nor was it just a rational response to market conditions and technological change as the Chandler’s would. It is my argument that in the late eighteenth and early nineteenth centuries the business firm on the colonial frontier was also a site of contestation in which categories of class, race, and gender were mobilized in new ways by British and American traders in an effort to control fur trade society. The various organizational forms such businesses took were as much a product of social and political struggles as they were a rational response to market conditions, or the product of a particular cultural outlook. And the development of a managerial class in the fur trade that was defined by its members as metropolitan, white, and middle-class, was a function of imperialism, as much as it was of economy.

Part II: Business Organization as a Form of Imperialism

In Chandler’s analysis of the rise of big business he argues that the rail roads were fundamental to the development of large multi-unit, vertically integrated corporations because they provided both the technological means to achieve such an organizational form, and supplied an early model of that form. The heroes of this narrative of triumphant modernity are not simply business men trying to make a buck – although they are usually that to – but engineers and managers trying to solve problems with the tools they have at hand. And the problems of transport, communication and coordination which they were trying to solve, are analogous to the problems that beset the ownership of the large fur trading organizations.

The merchants of Montreal, both French and Scot, were the dominant force in the fur trade from its earliest days until its decline in the twentieth century. Their influence survived the Seven Year War, the American Revolution, the War of 1812, and the 1837 rebellion in Canada. They flourished under French, British, and, until the U.S. government kicked them out, American rule.[13] To find a Chandlerian answer to the question of why such success, we need to first identify the technical problem which Canadian ingenuity resolved. And that problem, interestingly, is the same one the railroads were to solve for a later generation of businessmen: the sheer scale of North American geography.

The Montreal merchants were the first businessmen to appropriate the native technologies necessary to master the waterways along which goods could be moved relatively cheaply. The large voyageur canoe was big enough that it could contain a large volume of pelts, but still small enough that it could be maneuvered through a tangle of lakes and rivers and be lugged across innumerable portages. On the Great Lakes, on Lake Winnipeg, on Hudson’s Bay, on the Mississippi, the Missouri, on any body of water larger enough to facilitate larger vessels, the fur traders were quick to use ships, York boats and eventually steam technology to move pelts, but if the merchant wished to gather furs close to their source rather than at collection points, it was the canoe that maximized efficiency in transportation. Everywhere that is, except on the Hudson’s Bay coastline, where British ships could sail right up to the factories and posts where trade with the Indians took place. But in the interior of the continent Montreal’s location on the St. Lawrence and the facility of its inhabitants with native technologies meant they had a distinct advantage over more southern and eastern competitors.

The Canadians were also the first to develop the organizational form that predominated in the in-land fur trade. The Montreal trade was originally controlled by a handful of rich merchants who colluded with the French Crown to monopolize the trade. But this mercantilist stage was eventually superseded by one in which the small independent operators who had always existed in Canada, albeit illegally, flooded the wilderness with first French and later English goods. The coalition of the wintering partners who actually conducted trade inland and the merchants who oversaw the transatlantic trade came to predominate for two reasons. Their integration meant first of all, that neither businessman had to compete for commodities in the open markets at rendezvous like the one at Fort Michilimackinac, on the straits between Lake Huron and Lake Michigan.[14] Such cooperation drove transaction costs down. Second, it meant the merchants could avoid some of the risk involved in ventures that not only took as long as three years to turn a profit, but also which depended on the vagaries of fur production. The poorly capitalized wintering partners purchased manufactures on credit, and a single poor season could break an independent operator. Formal, long-term relationships meant the partners could avoid some of the friction and uncertainty that resulted from purchasing on credit. These vertical partnerships were eventually followed by horizontal partnerships in which wintering partners would form coalitions in the wilderness, and merchants in Montreal did likewise with their local competitors. [15]

While these firms were initially controlled by French families, Scots and American colonists began to force their way into the trade following the Seven years War. The influx of new traders and the enthusiastic competition that followed led to a period in which the political and commercial hegemony of the HBC in the far northwest began to be threatened. It was out of this competitive effervescence that something like Chandler’s large, multi-unit, vertically and horizontally integrated, corporation began to evolve. Small independent players were absorbed into partnerships and coalitions until only a handful of powerful companies remained in the field. In the first twent years of the nineteenth-century the HBC, the Montreal based North West Company (NWC), the XY Company which broke away from the NWC, and Astor’s American and Pacific Fur Companies (AFC and PFC) were all competing vigorously, and occasionally violently for control of the trade. The years following the War of 1812 saw the merger of the NWC and the HBC into a single massive company which controlled the trade north of the 49[th] parallel while Astor’s AFC controlled the trade to the south.

These mega-companies were not dissimilar from Chandler’s modern corporation. They literally spanned the globe; contributed to the integration of Caribbean, North American, European and Chinese economies; were run by a class of managerial experts who periodically restructured organizational form to achieve greater efficiency, and who were highly conscious to how critical transport and communication technologies were to their business. Unlike Chandler’s modern corporation however, the managerial class during this period were not salaried employees but partners who claimed a share of the profits. And further more, its vertical integration was hampered by certain material limitations. Both the nature of the commodity traded, and the technologies by which that commodity was produced and transported to market, simply could not produce the volume of trade necessary for the economies of scale which a fully industrialized enterprise mobilized.

If Cochran were to criticize this faux-Chandlerian interpretation he would argue that it underemphasizes two critical factors. The first is the role of legislation and politics in creating the infrastructure in which the fur trade actually took place. The second is the attitudes or the sentiments of the traders themselves – the culture that made them behave as they did in the first place. It is certainly the case that without at least some attention to politics the history of the fur trade would be incomprehensible. The involvement of the French and British crowns in the trade, the granting of charters and monopolies, the intense negotiations between the British and the Americans over the forts and outposts south of the Great Lakes and west of the Rockies, were all events driven as much by geo-political concerns and imperialist ambitions as they were by economic calculus.

To suggest, for instance, that private partnerships replaced crown monopolies by the eighteenth century simply because they were more efficient obscures an important clash of political interests. The smaller partnerships were coalitions of local bourgeois businessmen who challenged aristocratic and metropolitan interest groups, Lord Selkirk and his cronies sunk a fortune into their very public legal battle with the upstart Scottish colonials in Montreal, and Astor endlessly whispered to American congressman and senators about British influence over frontier Indians. The support of the politicians was critical to the successes of the big firms and they spent good money to ensure it.[16] It was the state that gave the HBC its monopoly, provided the NWC with the forum to challenge that monopoly, and which protected Astor from northern competition. The difference in the way these companies looked and were organized was a function of their relationship with the state as it was of their relationship with the market.

The degree to which culture, as conceptualized by Cochran, contributed to this history is another matter. His notion that the origins of American economic behavior were to be found in the conjunction of British character with North American geography is not particularly useful in the analysis of the fur trade. There is simply too much cultural diversity and too much experimentation occurring for any one group to be identified as having an especially entrepreneurial spirit. Not just the Americans but the French, the Spanish, the English, the Scots, the Russians and even one important German, were all opportunistically trying to squeeze profits out of the wilderness in any way they could. The native peoples to, were hardly uncomprehending bystanders. Indian trappers were quick to exploit economic and political tension between European groups to further their own interests.[17] Cochran’s preoccupation with Yankee industrialism and an expanding frontier may make for a good national origins story, but its focus on such a small proportion of the population means it does little to illuminate the frontier landscape in which he sets it. The economic success of the various cultural or ethnic groups was more the result of political and military power, than some sort of idealized national characteristic.[18] Once North America was formally divided up between Washington and London, and the reach of metropolitan legal, political and military institution began to extend into regions which had formerly been controlled by local inhabitants, the balance of power in the fur trade shifted dramatically, and it shifted towards the east. The turbulent reorganization of fur trade businesses during the period following 1812 ultimately reflected this change in the center of gravity, but reinforced it by using the language of race, gender and class to exclude locals from key decisions in the trade. Eastern businessmen had made attempts in the past to overpower frontier independence but managed to do so only after the consolidation of imperial power over the West was well underway. As we shall see, the manner in which the businessmen of London, Montreal and New York restructured the fur trade in the first half of the nineteenth century was as much an act of imperialism as it was a rational response to market forces or colonial ingenuity.

Business Organization and Class

One of the chief criticisms of Chandler’s work has always been that labor is invisible in it.[19] In his model the obstacles which management needs to overcome to increase profit are technological and institutional. The actual relations between the workers, managers, and owners are obscured behind arguments about efficiency and information flows. Chandler’s readers can quite easily lose sight of the business enterprise as what Durkheim would have termed a social fact. The firm, after all, is an institution which is more than a machine that can be tweaked to maximize profit, but also a form of behavior governed by a shared system of ideas and rules of which individuals may have only a dim awareness, and which have little to do with the calculus of business.[20] The managerial drive towards rationalizing the business firm can be interpreted as a form of social conflict in which one group attempts to monopolize control of a powerful social institution by excluding other groups from key positions. From this perspective the economic and organizational arguments of managers, and of historians who treat them as transparent, really are rationalizations – claims that may justify behavior but which do not necessarily explain it. In the case of the fur trade for instance, increasing managerial sophistication changed not only the internal organization of the business, but the way the businessmen interacted with other members of the societies in which they moved.

In the coastal trade in the Bay the distinctions between the factors and the traders and the Companies servants had been imported along with the labor and class distinctions were rigidly enforced with military discipline. But in the earliest days of the fur trade anyone with a few goods, or the land to trap, could acquire a few furs and bring them to market. French fishermen, coureur des bois, Algonquian and Cree middlemen, were all small operators who exploited their position between markets to acquire goods and/or accumulate wealth. But once merchants who purchased furs from such peddlers eventually formed coalitions with a few such independent owner-operators in order to avoid the uncertainties of exchange in an open market the only opportunity to participate in the trade left to the remaining actors was as wage labor. The coureur des bois, who might once have supplemented his existence as colonial peasant by dabbling in the fur trade could neither trap nor trade in the volumes necessary for his labor to be profitable. He could find work as a salaried voyageur but the actual trade now belonged entirely to the bourgeois – literate men with mercantile connections, men who no longer labored along side the voyageur but managed them. The tactic of creating partnerships among established bourgeois and advancing promising clerks slowly into partnerships made this increasingly difficult, and reinforced the social distinction between the muscle that moved the canoe and the businessman who owned it.

During periods of volatile competition such class boundaries seemed to be more permeable. When Astor broke into the trade for instance, he attracted precisely those sorts of traders who had been having trouble making the transition from labor to clerk to partnership, men such as Ramsey Crooks, who managed the day-to-day operations of the AFC in the west and in 1834 bought Astor out. During the period of greatest competition between the HBC and the NWC ambitious men would trade loyalties between companies in return for advancement.[21] When the turbulence of those years ceased with the merger brokered between the two companies by the British state in 1821, so did the ease with which men could pull themselves up by their own boot straps. The stockholders of the HBC installed George Simpson as their Governor in the Northwest. A position he was to hold until 1860. Simpson, who had worked for one of the chief HBC Governor’s in the sugar trade, had no experience in the fur business, but he lost little browbeating the previously independent factors and traders into something resembling submission. Once Simpson was fully in charge the battlefield commissions of the past became rare, and formally educated managerial staff were increasingly shipped in from Britain.[22] Simpson also moved quickly to downsize the labor force, and many métis, Indians, and fur trade children found themselves bereft of employment. A calm market place, and increasing metropolitan control of the frontier, meant less opportunity for local hands and a more rigid social stratification of fur trade society along class lines. Simpson was particularly sensitive to the importance of maintaining social distinctions, and one of his complaints about the Methodist missionaries the HBC was allowing into its territory during this period was that they fraternized with the less respectable participants of the fur trade society.[23] It is striking that it was after the state intervened to calm the turbulent frontier that the HBC, with its steadily more entrenched managerial class, rigid stratification, and close attention to organizational efficiency and labor control, began to look most like a modern Chandlerian firm.

Business Organization and Race

In the early years of the inland trade the split into two classes broke along ethnic lines because individuals with connections to powerbrokers in Europe had better access to the capital and credit necessary for long-term adventures. While French colonials initially dominated the trade it they were soon replaced by Scots and the distinction between bourgeois and voyageur became one of race, religion and language as well as class. In the HBC there had been a divide between predominantly Gaelic speaking servants and English officers from quite early on. What we would call ethnicity identity had long been a key factor in the organization of the fur trade but the degree to which it once replaced economic function when it came to the largest working population of the industry is still a curious fact of fur trade historiography. In a great number of histories local employees such as the trappers, hunters, fishermen, tailors, guides, interpreters, stevedores and technical advisors who were critical to survival of the industry in the northwest are not referred to in terms of their economic function but simply as a largely undifferentiated racial group, that of Indian.

Since the 1970s however, there has been increasing attention paid to that category by ethnohistorians such Arthur Ray’s classic Indians in the Fur Trade: Their Role as Trappers, Hunters, and Middlemen in the Lands Southwest of Hudson Bay, 1660-1870.[24] We now know that from quite early on, until the middle of the nineteenth century, there were three broad categories of such labor– homeguard, middlemen, and trappers. The first of these categories were those communities lived near the outposts and forts of the trade and had close kinship ties to the Europeans. They hunted and fished for the traders, providing the crucial provisions, technology and local knowledge. There was always some degree of intermarriage between the formal employees of the trading firms and their informal home guard employees, and what few moments of violence there were between Europeans and Indians occurred when traditional relationships and obligations were violated or ignored.[25] The traders imagined the relationship to the homeguard in paternalistic terms, referring often to “their” Indians, distributing food during periods of famine, burying home guard Captains in European cemeteries, and encouraging fur trader children to become voyageurs, clerks and occasionally even bourgeois.

Cree and Algonquian middle men with close connections to the homeguard were also the inland bridgehead of the fur trade. They controlled access to the interior until competition between Montreal and London heated up and the HBC and the NWC began trying to cut them out. They remained a crucial conduit of arms to the Sioux until the nineteenth century and it was their connection to the trade that made them key figures on the geo-political stage of the High Plains. It was these wide-ranging traders that first brought Europeans into the interior and facilitated their negotiations with other groups.

Finally there were the trappers. This was the largest group and for the European fur traders and their historians it was usually the trapper they had in mind when they talked about “Indians.” It was the trapper whose labor they most wished to control, and they dreamed about finding ways to alienate him them from their land and transform them into wage earners.[26] Trade was heavily subsidized by gifts of alcohol and tobacco, but such items were not enough to ensure a supply of beaver as steady as the trans-Atlantic markets demanded. So long as the fur trade was but one element of a life that included big game hunting and fishing, the big trading companies could not convince local trappers to provide either the volume or type of furs that they most desired at any given time. The locals, both Indians and Métis, were jealous of trapping, hunting, and even mining rights, and so long as the European traders were in a minority, and their government distant, they had little choice but to negotiate on local terms as equal partners.

The fur trading companies could simply not afford to ship European labor into the wilderness and keep them alive, so local control of actual production remained unchallenged until the nineteenth-century. It was only with the arrival of substantial settler populations that the traders could begin to ignore the old moral economy of inter-marriage, politicking and gift-giving, and start insisting on a free-market competition in which locals no longer had an advantage over imported or migrant labor. Both in the Red River Valley and in the Rocky Mountains individual trappers, usually European, began to challenge the Indian monopoly on trapping and frequently violence ensued. It was Astor who first started experimenting with non-Indian labor, as early as 1810 he had sent trappers into the Rocky Mountains with the Astor expedition. But so long as the Great Plains and the Columbia River Valley were controlled by the local tribes this was highly dangerous work.[27] It was only in the 1820s, with increased western settlement and an increasing military presence that the Rocky Mountain system, with its famous mountain men – salaried and independent trappers who brought their pelts to seasonal rendezvous – began to replace Indian labor south of the 49[th], with white.

It is striking fact that managerial capitalism and scientific racism arrived together on the Great Plains at the same time as the British Empire and the new American nation-state consolidated their political claims over the territory. It was the HBC and the fur traders of St. Louis who brought in and accommodated the painters and the ethnologists who were to record the vanishing frontier Indians, and represent them to the American and British public as the unfortunate victims of inevitable progress.[28] The fur traders were perfectly positioned to act as the sympathetic caretakers of the dying culture and to take advantage of the demographic transformations that were taking place. In the nineteenth-century U.S. many fur traders became general retailers for settlers and reservation Indians and in Canada the HBC became a retailing giant as the prairie was transformed into ranch farmland. Men like George Simpson represented themselves as both the nursing a doomed race through its final days and simultaneously acted as midwives for a new Anglo-Saxon civilization on the Prairies. Simpson for one invested heavily in canals, steam boat technologies, railways and banking even as they threatened to undermine the way of life upon which the fur trade depended. Managerial capitalism may have increased profitability for the big fur trade enterprises but it also contributed enthusiastically to the development of the virulent racist ideologies that accompanied the replacement of one socio-economic regime with another. To recognize that the business firm can be used as a weapon of imperialist aggression, as a tactic for excluding specific communities from the market place except as wage labor, is not to say that Chandler’s claims are wrong, but is to say he cannot help us answer all the questions that business historians of the nineteenth-century need to addressed.

Business Organization and Gender

Much to the bewilderment and distress of the old hands who had made a home for themselves in the country, Simpson quickly stopped the practice of promoting the children of their mixed-marriages into the upper ranks of the trade and made management an exclusive reserve of British educated and trained managers. This growing discrimination coincided with Simpson’s efforts to streamline and rationalize the fur trade. Historians Jennifer Brown and Sylvia Van Kirke have argued that Simpson was also a central figure in the transformation of gender roles in fur trade society during the same period. Prior to the merger the NWC had encouraged its wintering partners to cement ties with the locals through marriage but the HBC had for officially forbidden their traders to either bring wives with them into the wilderness and had attempted to outlaw intermarriage. The Company’s anxiety about the extra expense of feeding the progeny of such relationships was couched uneasily in vague moral terms and showed a remarkable naivety of the day-to-day functioning of the outposts and the necessity of both unpaid female labor and the importance of local marriages to establishing good trade relations. The substantial métis population that existed both in the HBC outposts and outside them, and on which they depended for labor, suggests the degree to which that prohibition was observed. Simpson had indulged in numerous of these marriages à la façon du pays himself but in 1830 the Governor formally broke the 150 year old ban by marrying his cousin Francis and bringing her out to the territory.[29]

Brown and Van Kirke have argued that prior to the nineteenth century relations between the traders and local women were governed by a set of mutually understood norms. In their view Simpson’s governorship was one in which the domestic ideals of the Victorian middle class were introduced into fur trade society to the detriment of women who had long been active participants in the trade. In the view of Brown and Van Kirke they had been valuable enough as a source of a great deal of labor, and as means to establish political and commercial allegiances with native peoples, that many had been able to establish a fair degree of autonomy. Simpson’s cavalier and callous attitude towards the local women he called his “bits of brown,” and his attempt to install his cousin Frances as an example of genteel womanhood in the Red River Valley, not only distressed the older fur trade families, but inspired imitation among some of his lieutenants.

South of the 49[th] parallel the wives and daughters of an older generation of fur traders were also driven out of roles they had previously occupied in the fur trade. Susan Sleeper-Smith has argued that prior to 1812 women had managed to carve out positions of relative autonomy and power in the business, even running trading firms when male family members no longer could. In the aftermath of the War however both Indians and women were redefined as dependents rather than allies in the trade, and driven out by white American nationals who claimed exclusive access to the public marketplace.[30]


It is interesting that in the period after 1812 that white male bourgeois managed to establish a monopoly on trade both in British North America and the United States, where business circumstances were quite different. In British North America the entanglement of business history in these larger social processes is particularly visible. The merger of the two warring companies into a single great monopoly, and an agent of British imperial power, was not simply a matter of reorganizing a company– it resulted in the transformation of a society. With the cessation of competition and the formal establishment of national borders the turbulent frontier had calmed somewhat, and the factors and traders could reinvent fur trade societies in an image that had greater appeal to their vanity. And this new managerial caste was defined as much by their race, class and gender as it was by their economic function. But south of the border the same process seems to have been occurring. I am by no means arguing that the managerial capitalism is responsible for the marginalization of women and Indians in the fur trade. But it is the case that Chandlerian arguments about business organization being a product of evolutionary efficiency cannot, by themselves, explain why the exclusion of people from the market place began to be justified in racialized, classed and gendered language, at precisely that moment when the modern corporation was born.

The explanatory models of Chandler and Cochran raise as many questions about the fur trade, as they provide answers. By compartmentalizing business interests from political, social and cultural milieux in which they occur, as does Chandler, the technical problems faced by fur trade businessmen are thrown into sharp relief and comparisons between different modes of organizing trade becomes a relatively easy task. But the economic and commercial fields of analysis employed by Chandler do not account for the role of contingency, politics and culture in economic behavior. The market and the laws that rule it are a map of the world and not the world itself. To assume otherwise obscures the degree to which such managerial regimes originate in a world of desires, impulses and drives which cannot be easily quantified by the economist and require a different sort of theoretical frame to understand.

Cochran, at first glance offers an interpretation of behavior which does take into account such factors. His preoccupation with American polity and culture however, is based on a set of narrow assumptions about the exceptional nature of the Anglo-American character and behavior. His explanations may help the analyst step outside Chandler’s black box account of change in business organization, but they stop short at national boundaries in a way business men and business culture did not. Neither historian is interested in the manner in which the great transformations of business history depended on the reorganization not just of American society, but of communities of people who had no desire to be part of the new nation. Chandler and Cochran both need an empty space into which industry expands but that empty space was occupied by the fur trade and as the nineteenth century wore on the fur traders themselves began to act more and more as if the west was indeed unoccupied by anyone worth taking into account. As Atlantic power worked its way ever deeper into the interior British and American politicians ensured as best they could that their commercial allies, men like Astor and Simpson, had the leverage to renegotiate terms of exchange on the frontier to the detriment of local interests and the benefit of the metropolitan. Such renegotiations, and the exclusions that followed from it, were justified not simply in terms of economic rationality but increasingly with recourse to categories of class, race and gender. One of the questions that business historians have yet to fully address is the role of such exclusions in the evolution of the firm, and of the market for that matter, and the fur trade offers a splendid opportunity to address precisely such issues. This paper has argued that by the middle of the nineteenth century white, bourgeois men had consolidated their powerful position in fur trade society at the expense of women, Indians and labor. That consolidation of power coincided with the establishment in the fur trade of a professional managerial class that is typical of the modern business firm as imagined by both Chandler and Cochran. The question it raises is what should business historians make of that coincidence?

[1] It is telling that Chandler in particular is interested in comparative histories of the firm – studies in which the histories of business organization in a variety of countries are compared to each other. Such an approach is international in outlook rather than transnational.

[2] I mean by imperialism something similar to Said’s common sense definition. It is the attempt to by one group to control – politically, socially and/or economically – a region in which another group is living. See Said, Culture and Imperialism, (New York: Alfred A. Knopf, 1993) p.7.

[3] Alfred D. Chandler. “The Beginnings of the Modern Industrial Corporation,” Proceedings of the American Philosophical Society, Vol. 130, No. 4 (Dec., 1986), p. 382.

[4] See Alfred Chandler, The Visible Hand: The Managerial Revolution in American Business, (Harvard University Press: Cambridge, Massachusetts, 1977).

[5] For a discussion of throughput see The Visible Hand, p. 241.

[6] Age of Enterprise, p. 354. Cochran’s American individual here is a white male generally of British descent.

[7] Cochran’s chief examples are the machine processing of cotton, flour, and timber, and in the invention and production of steamboats capable of turning the great rivers into great highways. See Frontiers of Change, p. 70.

[8] Frontiers of Change, p. 78.

[9] Frontiers of Change, p. 113,

[10] Frontiers of Change, p. 126.

[11] Frontiers of Change, p. ?

[12] While they do not rate as canonical two historians who have paid close attention to the history of business in the fur trade are John Haeger and Ann Carlos. Haeger, who cites Cochran as an influence, argues that John Jacob Astor was an entrepreneurial genius whose business practices anticipated Chandler’s modern business firm. Haeger shows the complexity and sophistication of Astor’s business empire, and his ability to not only anticipate markets but shape them. Ann Carlos is an economic historian who has penned a number of articles on the Canadian fur trade in which she shows the rationality and intelligence of European and Indian participants in the trade. Both use the fur trade to show the sophistication of business practice prior to the rise of large industrial firms but neither offer a serious challenge to Chandler’s thesis or advance Cochran’s intuitions about the role of culture and political context in their development. For Carlos see Ann M. Carlos The North American Fur Trade, 1804-1821: A Study in the Life-Cycle of a Duopoly, (New York: Garland, 1986) , Carlos and Stephen Nicholas, “Theory and History: Seventeen-Century Joint-Stock Chartered Trading Companies,” The Journal of Economic History, vol. 56, no. 4 (Dec., 1996) pp. 916-924, Carlos and Frank Lewis, “Property Rights, Competition, and Depletion in the Eighteenth-Century Canadian Fur Trade: The Role of the European Market,” The Canadian Journal of Economics, Vol. 32, No. 3 (May, 1999), pp. 705-728. For Haeger see John Denis Haeger, “Business Strategy and Practice in the Early Republic: John Jacob Astor and the American Fur Trade,” The Western Historical Quarterly, Vol. 19, No. 2 (May, 1988), pp. 183-202, and John Jacob Astor: Business and Finance in the Early Republic, Detroit: Wayne State University Press, 1991.

[13] See Lavender, p.

[14] Lavender, Innis

[15] See Innis etc

[16] Galbraith on Simpsons bribing, Haeger on Astor/

[17] Indians and the fur trade

[18] Examples—Spanish then Americans, French then Scots, Russians then British.

[19] For a summary of some such criticisms see “Elaborations, Revisions, Dissents: Alfred D. Chandler, Jr.’s, “The Visible Hand” After Twenty Years” The Business History Review, Vol. 71, No. 2. (Summer, 1997), pp 190-192.

[20] Durkheim/Mauss

[21] See for example....

[22] Fin source


[24] Ray, Arthur J. Indians in the Fur Trade: Their Role as Trappers, Hunters, and Middlemen in the Lands Southwest of Hudson Bay, 1660-1870. Toronto; Buffalo; London: University of Toronto Press, 1974.



[27] Lavender

[28] George Caitlin, Paul Kane, George Bodmer, Prince Maximilian of Wied.

[29] For a recent, brief account of Simpson’s behaviour and of earlier research into marriage and the fur trade see Heather Rollason Driscoll ““A Most Important Chain of Connection”: Marriage in the Hudson’s Bay Company,” in From St. Rupert’s Land to Canada edited by Theodore Binnema, Gerhard J. Ens & R.C. Macleod. (University of Alberta Press: Edmonton, 2001)

[30] Susan Sleeper-Smith, “An Unpleasant Transaction on this Frontier”: Challenging Female Autonomy and Authority at Michilimackinac,” Journal of the Early Republic, Vol. 25, No. 3 (Fall, 2005), pp. 417-443