by Dr David White
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Both sugar-cane and oil are commodities which require processing before they can become useful. Historically, each has required accompanying innovations to make them practicable. They have largely needed to be transported a long way from their sources to their principal markets. Each commodity, with the exception of the United States’ domestic oil supplies and more recently Middle-Eastern output, has been controlled by businesses and nations not native to their countries of origin.
Sugar and oil had been in use for hundreds of years before their sudden take-off into major commodities. In the case of sugar, it was the discovery that it could be grown easily in the tropical regions of the New World which led to its expansion, spreading consumption wider and deeper through European society where previously it had been confined to the wealthy because of its cost. When it was combined with other newly arrived products, principally tea and coffee, demand for sugar expanded rapidly and for nearly a century it was England’s largest import.[1] Oil in a similar fashion took off when it was required for use in new products, principally as a fuel for the internal combustion engine, but also as a source of lubrication for most other engines and machinery whatever their motive power.[2]
While the consumption of sugar did not of itself change much in European society other than to encourage a greater sweet-toothedness (and loss of teeth), oil usage saw the Western world hugely transformed. Within half a century the spread of the automobile swept away horse-drawn vehicles from the streets and led to massive road-building programs and alteration of the very design and fabric of cities and towns. Without refined oil, aviation would have been impossible. When naval vessels switched to fuel oil in the early 20th century, this added significantly to the geopolitical developments brought about by the oil industry’s growth.[3]
Because of the value of the sugar trade and the huge profits which could be made from it, nations as well as individuals sought to protect their interests and exclude others from both the sources and the markets. Protection of the sources meant taking possession, or colonising, the areas where sugar cane could be grown profitably. The Portuguese, Spanish and Dutch fought over the sugar-growing areas of north-east Brazil throughout the 16th and early 17th centuries. However, owing to the destructive nature of the conflicts and the massive death rate among both white settlers and the native populations, this potentially lucrative trade was largely lost to the English in the later 17th century. Nevertheless, the Brazilian sugar industry gave rise to two crucial innovations which were swiftly incorporated into the English sugar areas of the Caribbean – the plantation system and black African slavery.[4]
The phenomenon of sugar slavery has few similarities with the growth of the oil industry. Apart from its illegality in the 20th century, oil extraction, refining and transportation is not nearly as labour intensive as sugar was in the earlier period. The horrors of the slave trade, the cruelties of the plantation system and the uprooting of millions of people from their homes and their populating of foreign lands has no parallel in the expansion of oil. The growth of the black African slave trade as a direct consequence of the need to cultivate sugar with labourers who did not die quickly in tropical conditions, allowed slavery to expand into other agricultural areas, notably cotton and tobacco. This led to the southern states in North America developing a slave plantation system which might not otherwise have occurred since these commodities were initially worked by free and indentured white labour.[5]
Despite this major difference, there are analogies in the developments which emerged from the desire to protect sources and markets. Repeated conflicts between nations which often developed into full-scale war, plus the use of state-sponsored privateers marked the great age of the sugar trade throughout the 17th and 18th centuries. Since the sources of sugar were overseas, this required nations competing for control of the supply to invest large amounts in their armed forces, in particular their navies. Over the period in question this mainly involved England, France and Holland. These early modern naval races sometimes seemed to take on a life of their own with ends and means becoming confused. Strategy and diplomacy often became beholden to military rather than commercial imperatives, such that the acquisition of overseas possessions which could provide goods and commodities became a means of preserving or promoting naval supremacy.[6]
Much of what drove the mentality and policies of traders and governments in the 17th and early 18th centuries was the prevailing economic theory known as mercantilism. This theory of wealth-creation and trade asserted that there was a fixed quantity of wealth in the world and that a gain by one nation would cause a loss to another. Governments therefore felt bound to intervene in trade, regulate the economy and set economic policy – at least to a degree that was possible in this age of poor communications and limited methods of central control.[7] This had the effect of increasing the power of the state, developing a powerful fiscal and financial infrastructure, establishing the Bank of England, and creating the National Debt. Furthermore, driven by this ideology, the expansion of the English/British navy to protect the Atlantic sugar trade led to the emergence of Britain as one of the two most powerful nations alongside France, and to the acquisition of a growing empire.[8] However, it also contributed to the grievances of Britain’s North American colonies and theit successful fight for independence.
The Navigation Acts forbidding the transportation of colonial produce in foreign shipping were the most evident form of protectionism imposed by the English state. It has been argued that, “The idea of empire that the Navigation Acts enshrined was that of a closed system”,[9] and that this therefore held back global trading. However, others have argued that a consequence of all the above was to discredit the very theory of mercantilism which was then superseded by the economic model of capitalism. This new system allowed for wealth expansion that did not involve a zero-sum game and was accompanied by a new class rising to prominence, firstly economically and later politically – the bourgeoisie, and in particular its merchant element.[10]
The impact of oil did not create a new theory of economics nor a new social class, but it did contribute greatly to the cementing of the power of capitalism and big business and their influence on government policy. This was achieved by several principal developments – the emergence of price- and market-fixing cartels, industrial concentration, mergers, the rise of the first multi-national companies and reliance on an essential commodity imported from overseas. The economic crash of 1873 had put a brake on the mid-century expansion of free trade and led to a resurgence of protectionism, but this did not slow industrial growth. As the oil industry expanded, it benefitted from this renewed government interventionism; and as state involvement in economic matters grew, so in turn did business influence upon government expand.[11] The nations which contested the sugar trade (England, Holland and France) and those which were part of the oil industry (Britain, Holland, France and the USA) were the only states in each era with enough surplus capital to be able to invest in the outlay necessary to make the ventures successful.[12]
Even more than in the era of sugar’s predominance, means and ends became ever more entwined during the oil industry’s rise to pre-eminence. While sugar was merely a consumer item, oil became the very means of fuelling the ships, trucks, aircraft and tanks which were necessary for guarding the nation’s interests. Was the military the guardian of oil supplies, or were oil supplies the guarantor of the military’s power? What was deemed certain was that the oil industry’s interests were also the nation’s interests. “Oil was now a strategic resource – Governments could hardly ignore the security of their supplies”.[13] This was apparent in the post-World War I peace settlement in the Middle East. Britain and France carved up the Ottoman Empire’s former territories and awarded them to themselves as mandated territories, aware of the resources to be found in the area which would later become Iraq, and with oil interests playing a major role in the negotiations.[14]
During the interwar period, Germany and Japan which lacked oil and a presence in the industry, made access to sources a major component of government policy and of strategic military planning. Japan’s conquest of south-east Asia and Nazi Germany’s synthetic oil program and her 1942 military drive towards the Caucasus were evidence of the central role which this valuable fuel had to play. Among the immediate causes of war between the USA and Japan in 1941 was President Roosevelt’s decision to impose an oil embargo upon the latter.[15]
Analogous to the rise to prominence of Britain as a world power in the 18th century, was the emergence of the USA as the richest and most powerful state in the 20th century. Before this came to full fruition, two major wars were required as were even more smaller ones. Similar to the Franco-British rivalry was that between the United States and the Soviet Union. However, while France and Britain had been states with broadly similar social, economic and ideological make-ups, the hostility between the USA and the USSR was based on fundamental ideological differences which were characterised by opposing economic practices and political institutions.
Nevertheless, security of oil supply increasingly became a major source of concern to the USA and a driving force for foreign policy, especially when it became apparent after the Second World War that her domestic supplies were being outstripped by growing demand. Oil now became an increasingly imported commodity whose availability had to be safeguarded by military as well as diplomatic and economic means. After the Second World War, and particularly following the oil-price crisis of 1973, the focus of US foreign policy and her readiness to intervene militarily concentrated increasingly upon the Middle East and its vast reserves of oil.[16] Following the collapse of Communism, this became even more pronounced, leading to two Gulf Wars. Oil wars like sugar wars developed from a lucrative commodity trade deemed essential to national interests.
The profits made from sugar and oil were immense. In the case of sugar, virtually all were repatriated back to Europe by the owners of the plantations, benefitting these individuals and the colonising nations. Investment in the Caribbean and other colonies which grew sugarcane was minimal, consisting only of refining capacity and the infrastructure necessary to get the cane to these installations. Almost none of the indigenous peoples benefitted from the trade, and certainly not the slaves who made it possible by their unpaid labour.[17] Much the same was true of the profits generated by oil extraction until 1973 when OPEC (Organisation of Petroleum Exporting Countries) used their combined power to exert greater control over crude oil prices. It is here that the analogy with the sugar trade breaks down somewhat, since the peoples (or at least the rulers) of the Middle East, Indonesia, Venezuela and other Third World countries were now able to bargain with the multinational oil companies and their governments for a chunk of the profits to remain in the countries of extraction.[18] Both the sugar and oil industries were catalysts for economic expansion in their eras, the former principally for Britain, the latter mostly for the United States. Matthew Parker has declared that, “The success of the sugar industry helped shape the modern world”.[19] He also asserted that, “Sugar [became] the most important commodity in the world – enjoying a position in the eighteenth century… akin to oil in the twentieth”.[20] Both altered the very nature of the economic systems in which they operated, both influenced domestic politics, and both led to diplomatic and military developments to protect these vital and valuable trades. The analogies are not complete, particularly as regards the benefits and disbenefits conferred upon the countries from which these products came, but the scope and impact of their influence were massive, rivalled only by precious metals as commodities which changed the course of history.
Sources
Brewer, John, 1989. The Sinews of Power: War, Money and the English State 1688-1783. London: Unwin Hyman.
Derry, T.K. and M.G. Blakeway, 1973. The Making of Pre-Industrial Britain. London: John Murray.
Ferguson, Niall, 2003. Empire. London: Allen Lane.
Hobsbawm, Eric, 1989. The Age of Empire. London: Cardinal/Penguin.
Parker, Matthew, 2011. The Sugar Barons. London: Hutchinson.
Rhodes, Richard, 2012. “The Power of Power” in History Today, Vol.62, Issue 8, pp.37-42.
Watt, Donald, 1983. “Oil: History and Politics” in History Today, Vol.33, Issue 9, pp.39-41
Yergin, Daniel, 1991. The Prize: The Epic Quest for Oil, Money and Power. London: Simon and Schuster.
References
[1] Niall Ferguson, Empire, pp.14-15.
[2] Richard Rhodes, “The Power of Power” in History Today, Vol.62, Issue 8, 2012, pp.39-40.
[3] Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power, pp.194-212; Rhodes, “Power”, pp.39-40.
[4] Matthew Parker, The Sugar Barons, pp.9-13.
[5] Ferguson, Empire, pp.73-80; Parker, Barons, pp.44-66.
[6] John Brewer. The Sinews of Power: War, Money and the English State 1688-1783, pp.167-190.
[7] T.K. Derry and M.G. Blakeway, The Making of Pre-Industrial Britain, p.212.
[8] Brewer, Sinews, pp.135-162.
[9] Derry and Blakeway, Pre-Industrial Britain, p.213.
[10] Brewer, Sinews, pp.xiii-xxii & passim.
[11] Eric Hobsbawm , The Age of Empire, pp.34-46.
[12] Donald Watt, “Oil: History and Politics” in History Today, Vol.33, Issue 9,1983, p.40.
[13] Watt, “Oil”, p.39.
[14] Yergin, Prize, pp.184-206.
[15] Yergin, Prize, pp.305-367.
[16] Yergin, Prize, pp.391-408 & 633-652; Watt, “Oil”, pp.39-41.
[17] Parker, Barons, pp.296-324 & 363.
[18] Watt, “Oil”, pp.40-41
[19] Parker, Barons, p.360.
[20] Parker, Barons, p.2.
