Book of the Week: Uncommon Wealth

Kojo Koram tells how Britain’s richest corporation began life in Iran

In the first decade of the 20th century, a burly, moustachioed British businessman called William Knox D’Arcy began an audacious search for oil in Persia. After raising money from investors at home, D’Arcy was able to get a contract from the Shah of Persia for the right to explore for oil across 480,000 square miles of land (around five times the size of the UK) for sixty years, in exchange for £20,000 and 16 per cent of the profits he would make from any oil found.

With his contract in hand, D’Arcy sent his team of engineers into the desert to search for his fortune. Initially, his efforts appeared fruitless, and by 1908 his financial partners’ patience was exhausted. He was told by his financers that if the engineers had not found any oil by the time that they reached 1,500 feet below the surface, then they would be pulling their money out and the search would be abandoned.

As D’Arcy was losing heart, at 4 a.m. on 26 May 1908, one of his drills finally hit oil at 1,179 feet. British imperial soldiers were immediately called to surround the area and protect this new treasure trove from any local threat.

That day, the first of the great Middle Eastern oilfields was born – and the river of black gold has not stopped flowing since. The personal rewards for D’Arcy were immense – soon afterwards he became the director of a new company that would one day become Britain’s richest corporation. Originally known as the Anglo-Persian Oil Company, D’Arcy’s oil discovery was the birth of British Petroleum or, as we call it today, BP.

BP currently bestrides the globe as one of the largest multi-national companies in the world, but a century ago, it was just an ambitious private initiative, albeit one working in tandem with British imperial policy.

The birth of the Anglo-Persian Oil Company epitomised the spread of enormous oil and gas companies that have come to dominate the world’s energy market, but it began life as just the latest in a long line of corporate bodies that played a key role in extending Britain’s imperial reach across the globe. Its operations in Persia served to solidify Britain’s influence in an area that was home to one of the oldest civilisations in the world.

During the First World War, Britain occupied much of the country, and while it didn’t become a formal colony, as part of what was called “Britain’s informal empire” Persia remained a key part of the British world system. On Winston Churchill’s recommendation, the British government bought a percentage of the firm. The government’s stake came in useful to power the country’s war efforts. The alliance between the British state and the Anglo-Persian Oil Company once again highlights the importance of corporate power to the structures of British imperialism, even deep into the20th century.

Of all the inventions the British Empire gave to the world, perhaps the most significant, despite being rarely mentioned, was the modern, commercial corporation. A corporation can be generally defined as an entity, created by law, to exist as a separate thing to the individuals that created it. The corporation has a legal life, not a natural one. Like the monarchy or the church, it is something different to the individuals who make it up – a shareholder is not a company just as the Queen isn’t the monarchy. The corporate model is the ideal legal structure to allow an organisation to outlive its members and, in turn, allow the members to be protected from being personally liable for the actions the organisation undertakes.

In the medieval age, corporations were mainly bodies created for a social purpose – churches, charities and other organisations committed to a collective, long-term social good. Corporate charters allowed the organisation to continue with its benevolent work long after the founders were willing, or able, to pursue it.

However, as Europeans began to embark on imperial explorations, the corporate form became the ideal organisational vehicle for those who wanted to enjoy the riches of empire but be protected from the risk. The joint-stock corporation began to emerge through imperial voyages, where the “stock” that would be carried back on the ship would be shared among the corporation’s owners.

The first joint-stock corporation in England was the Muscovy Company, which was granted a royal charter of incorporation in 1555 by Mary I. Bringing together the corporate legal structure and the older idea of a company – a collection of people coming together to break bread among themselves – the early imperial age solidified the idea of the commercial company, with the Levant Company receiving its charter in 1592 and the East India Company in 1600.

Investors did not even have to leave the comfort of their own homes to get a taste of the bounty that these companies were plundering across the seas. From 1571, a “share” of the company’s “stock” could be bought on the London Stock Exchange, allowing investors to simply stay at home and wait for their share of the colonial pie.

This extract is from Uncommon Wealth: Britain and the Aftermath of Empire by Kojo Koram (£12.99, John Murray Press)

We’ll be chatting to Kojo Koram on “A Drink with the Idler”, Thursday 9 February at 6pm London time. Book your tickets here. Free to Idler magazine and Academy subscribers.

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