The Ghosts of Mercantilism: From British Monopolies to America’s Corporate Giants

How State-Backed Monopolies Persist from Empire to Enterprise, Defying the Founders’ Vision

By Marven Goodman, July 21, 2025

For nearly three centuries, from the 1500s to the late 1700s, Britain wielded an economic system known as mercantilism, a doctrine of state-controlled commerce designed to amass wealth, bolster imperial power, and outpace rival nations like Spain, France, and the Netherlands. At its core, mercantilism prioritized trade surpluses, colonial exploitation, and the strategic use of monopolies granted by the Crown. These monopolies, bestowed upon chartered companies like the East India Company (EIC) and the Hudson’s Bay Company (HBC), were not mere economic tools; they were instruments of empire, weaving Britain’s fortunes into a global tapestry of commerce and conquest.

Mercantilism

The East India Company, chartered in 1600 under Queen Elizabeth I, epitomized this system. Granted exclusive rights to trade with the East Indies, the EIC evolved into a behemoth that controlled spices, textiles, and, by the 18th century, tea. With powers to wage war, build forts, and administer justice, it was less a company than a state within a state. Its monopoly over the tea trade became a flashpoint in the American colonies, where resentment simmered over Britain’s mercantilist grip. By the 1770s, the EIC faced a crisis: warehouses brimmed with unsold tea, undercut by cheaper Dutch imports smuggled into colonial ports. Parliament’s response, the Tea Act of 1773, aimed to bail out the EIC by allowing direct sales to the colonies, slashing middlemen and duties. On paper, tea prices dropped, but the act preserved the EIC’s monopoly and retained a modest tax, the Townshend duty of 3 pence per pound.

Colonial reaction was swift and furious. On December 16, 1773, the Sons of Liberty, masked as Mohawk Indians, stormed EIC ships in Boston Harbor and dumped 342 chests of tea, worth £10,000, or millions today, into the icy waters. Historians like Benjamin Carp argue this Boston Tea Party was less about the tax than the EIC’s monopolistic stranglehold, which threatened colonial merchants and smugglers alike. The tea, though cheaper than before, remained pricier than illicit alternatives, and the monopoly signaled a broader erosion of economic autonomy. The event ignited a revolutionary fuse, exposing mercantilism’s fragility when imposed on a restive periphery.

Across the Atlantic, the Hudson’s Bay Company, chartered in 1670 under Charles II, held a different monopoly: the fur trade in Rupert’s Land, a sprawling Canadian wilderness. Tasked with countering French traders, the HBC secured beaver pelts, coveted for Europe’s felt hats, through a network of forts and Indigenous alliances. Unlike the EIC, its monopoly endured with less immediate rebellion, but by the 19th century, it faced an unraveling economic landscape. Beaver populations dwindled from over-trapping, and European fashion shifted to silk, gutting demand. Competition from the North West Company, culminating in a violent 1821 merger, eroded its dominance. Britain’s turn to free trade, epitomized by the 1846 Corn Law repeal, cast monopolies as relics, while settlers in the Red River region demanded land, clashing with the HBC’s mercantilist model. In 1870, the company sold most of Rupert’s Land to Canada for £300,000, pivoting to retail and real estate, a transformation that preserved its legacy as a modern corporation.

In pre-revolutionary New England, mercantilism lacked a single dominant company but enforced its will through the Navigation Acts and policies like the 1733 Molasses Act, which protected British sugar monopolies at the expense of colonial rum distillers. Smuggling became a way of life, and the EIC’s tea monopoly only deepened the rift. The Boston Tea Party crystallized this discontent, proving that mercantilism’s rigid monopolies could spark rebellion when they clashed with local interests. By 1776, Adam Smith’s The Wealth of Nations had skewered the system as inefficient, and the American Revolution delivered its deathblow. The EIC’s monopoly faded by 1833, and the HBC adapted to survive, marking mercantilism’s twilight.

The Modern Echo: U.S. Government and Corporate Monopolies

Consider the tech giants, Amazon, Google, Meta, and Apple, whose market dominance rivals the EIC’s in its heyday. In 2023, Amazon controlled 37.6% of U.S. e-commerce sales, dwarfing competitors, while Google held 85% of the search engine market. These firms don’t rely on royal charters but on a more insidious tool: influence over Washington. Between 2018 and 2022, the tech sector spent $326 million lobbying Congress, according to OpenSecrets, securing tax breaks, antitrust exemptions, and intellectual property laws that entrench their power. The 2017 Tax Cuts and Jobs Act, for instance, slashed corporate rates to 21%, disproportionately benefiting behemoths with offshore cash hoards, while smaller firms struggled to compete.

Retaliatory tariffs, a mercantilist throwback, have historically exacerbated such distortions, as seen in the late 1970s under President Jimmy Carter. Facing a surge of cheap Japanese steel, the Carter administration introduced the Trigger Price Mechanism (TPM) in 1977, a policy that set a price floor based on Japan’s production costs to curb alleged “dumping.” Intended to shield U.S. steelmakers, it backfired: domestic firms, already lagging with outdated plants, couldn’t compete with Japan’s efficiency. By 1984, U.S. steel production had plummeted from 111 million tons in 1973 to 70 million tons, per the IMF, as imports, 24% of U.S. consumption today, filled the gap. Big steel weathered the storm with subsidies and lobbying, but smaller producers and steel-dependent industries, like auto manufacturing, suffered layoffs and closures, a collapse Adam Smith might have called the “inevitable ruin” of protectionism’s false promises.

Healthcare offers another parallel. Pharmaceutical giants like Pfizer and Moderna, buoyed by $2.5 billion in federal COVID-19 vaccine funding, have leveraged patent protections and lobbying to maintain sky-high drug prices. The 2003 Medicare Modernization Act, shaped by industry pressure, barred Medicare from negotiating drug costs, a boon for Big Pharma, but a barrier for generics and startups. In 2022, the top 10 pharma firms spent $127 million on lobbying, per Statista, ensuring legislation favors their monopolistic pricing over market competition.

The energy sector offers a stark reflection of mercantilist favoritism reborn. Fossil fuel titans like Exxon-Mobil and Chevron have raked in $20 billion annually in U.S. subsidies since the 1990s, a lifeline sustained despite global climate pledges. Much of this largesse now flows into carbon capture, a technology heralded as a climate fix but increasingly derided as a costly boondoggle that props up Big Oil at taxpayers’ expense. In 2023 alone, the oil and gas industry spent $104 million lobbying Washington, according to the Center for Responsive Politics, ensuring policies tilt toward their interests while a modern electrical power generation system know as Small Modular Reactors (SMRs) scramble for scraps at the public trough.

Carbon capture, which snares CO2 from smokestacks or the air and buries it underground, has devoured $12 billion in U.S. funding since 2010, with tax credits piling on another $8 billion by 2023, per BloombergNEF. Yet its impact is pitiful: just 15 projects trap a mere 26 million tons of factory emissions annually, 0.4% of the nation’s 6-gigaton total, according to the EIA and IEA. At $100–200 per ton captured, scaling it to meaningful levels demands a sprawling network of pipelines and storage sites, still years from reality, as Nature reported in 2023. Critics argue it’s a Band-Aid, not a cure, extending the life of aging coal and gas plants rather than hastening a shift to cleaner alternatives. The real sting? American taxpayers foot the bill, funneling public dollars into a system that keeps fossil fuel giants afloat under a green veneer.

This subsidy bonanza echoes Britain’s mercantilist past, where monopolies like the East India Company thrived on state favor. Today’s carbon capture push, bolstered by the 2021 Infrastructure Investment and Jobs Act, channels billions to oil-friendly projects while firms advancing distributed Small Modular Reactors (SMRs) face permitting snarls and funding droughts. The Regional Greenhouse Gas Initiative, a multi-state carbon-trading scheme, has raised billions since 2008, yet emissions cuts lag, with economic shifts, not the program, often credited for reductions. Skeptics go further, questioning the premise: CO2, a gas plants crave for photosynthesis, branded a pollutant to justify this economic reshuffling. USDA studies show crops like wheat and rice yield 15% more under elevated CO2, hardly the scourge it’s painted to be.

The U.S. stands at a crossroads. Keeping creaky coal and gas plants alive demands $117 billion in upgrades by 2030, while 70% of the nation’s 600,000 miles of power lines, over 25 years old, falter in storms and heat, per the DOE and ASCE. Carbon capture’s projected $100 billion cost by 2030, per the IEA, doubles down on this obsolete grid, chasing a phantom threat, CO2’s rise is natural, not apocalyptic. Meanwhile, distributed Small Modular Reactors (SMRs) offer a smarter path: $900 million from the DOE and Amazon’s 5-gigawatt pledge could yield 200 gigawatts by 2050, tripling nuclear capacity without leaning on crumbling infrastructure or CO2 traps. Big Oil’s lobbying locks us into yesterday’s energy, not tomorrow’s, mercantilism’s ghost, cloaked in climate rhetoric, stifling a nuclear renaissance.

Compare and Contrast: British Mercantilism vs. U.S. Interference

British mercantilism and modern U.S. government interference share striking similarities. Both systems empower monopolistic entities, chartered companies then, corporate titans now, through state backing. The EIC and HBC thrived on exclusive grants; today’s giants thrive on tax incentives, subsidies, and regulatory loopholes. Both prioritize national wealth, bullion for Britain, GDP for the U.S., over equitable competition. The EIC’s tea monopoly crushed colonial merchants; Amazon’s tax advantages and Google’s ad dominance stifle e-commerce and digital startups. Government serves as architect in both, whether via royal charters or legislation like the 2010 Dodd-Frank Act, which critics argue burdens small banks with compliance costs while letting Wall Street giants off lightly.

Yet differences abound. British mercantilism was overtly statist, with monopolies as explicit tools of empire; U.S. interference hides behind a free-market facade, where lobbying masquerades as democratic input. The EIC and HBC wielded quasi-governmental power; modern corporations wield influence through campaign donations, $4.1 billion in the 2020 election cycle, and revolving-door hires like ex-Senator Chris Dodd at the Motion Picture Association. Mercantilism aimed to hoard gold; today’s system chases shareholder value, often at the expense of wages and innovation. The HBC adapted by diversifying; U.S. giants double down, using mergers, think Facebook’s $19 billion WhatsApp buyout, to kill competition, often with regulators’ tacit approval.

The impact on smaller players is a shared thread. Colonial smugglers evaded the EIC’s tea monopoly; today’s startups face patent trolls, funded by big tech, or regulatory mazes like the FCC’s net neutrality flip-flops, which favor ISPs like Comcast over new entrants. The American Revolution rejected mercantilist control; yet modern antitrust enforcement, last major breakup: AT&T in 1982, lags, with the FTC and DOJ underfunded and outmatched by corporate legal teams.

Warnings from the Founders and the Scottish Enlightenment

The architects of American independence saw these dangers coming. Thomas Jefferson, drafting the Declaration in 1776, railed against King George III for “cutting off our Trade with all parts of the world”, a mercantilist sin. In a 1787 letter to Edward Carrington, he warned, “If once [the people] become inattentive to the public affairs… corruption will follow.” Jefferson feared concentrated power, whether royal or corporate, strangling liberty and commerce. James Madison, in Federalist No. 10, cautioned against factions, today’s lobbyists, distorting the public good, urging a republic to diffuse such influence.

The Scottish Enlightenment, which shaped these men, amplified these concerns. Adam Smith, in The Wealth of Nations, dismantled mercantilism’s monopolies as “a manifest violation of the most sacred rights of mankind.” He argued that competition, not state favoritism, drives prosperity, a lesson lost on a U.S. Congress swayed by $1.2 billion in annual lobbying. David Hume, Smith’s contemporary, warned in his Essays, Moral and Political (1742) that unchecked power, public or private, breeds tyranny. Both saw government as a referee, not a player, in the economic game.

These warnings resonate in 2025. The Declaration’s signers rebelled against a system where monopolies choked opportunity; today, a startup’s odds of surviving five years hover at 50%, per the SBA, squeezed by giants with government-bought advantages. Smith’s free market is a distant ideal when Amazon pays a 6.6% effective tax rate (2021) while small retailers shoulder 20-30%. Hume’s fear of power consolidation rings true as six firms, Disney, Comcast, Warner, etc., control 90% of U.S. media, a monopoly born of lax merger oversight.

In closing, the lesson is clear: mercantilism’s spirit, state-backed privilege, never died; it morphed. The founders and their Scottish muses urged vigilance against such distortions, a call drowned out by corporate cash and congressional inertia. If history teaches anything, it’s that unchecked monopolies, then and now, sow rebellion, whether in tea-soaked harbors or a stifled entrepreneurial dream.