Middlemen in English Business 357 



men as factors and regulations were laid to effect this end.^ The 

 inadequacy of the law of inheritance made it necessary in some places 

 to have the factors act in partnership, so no seizures of goods by local 

 authorities were possible.- 



Another common fraud was false accounting and reporting to the 

 principal. They stuffed the expense account especially for local hire 

 and customs paid at the port. The seUing price and the cost price of 

 the cargoes received and sent were falsified to the factor's profit.^ 

 By such and other frauds the principal's money was embezzled. No 

 better corrective was found for such misconduct than a prescribed 

 system of accounting and provisions for close inspection of accounts.'* 



A very pecuHar fraud was operated by the factors in the Plantations 

 and Colonies of America. It is asserted that here they connived at 

 depreciating the currency during the time they held the goods on hand 

 and made returns to the EngHsh merchant oh the basis of the cheap 

 currency. Or to procure large business they sold at high prices in 

 consideration of very long credit given, and the returns of exports 

 were never shipped off till after a long period, in which interim the 

 colonists had purposely inflated and depreciated the currency.'' 



Throughout their history the most general evil done by the factors 

 against their principals issued from their practicing the merchant's 

 business in conjunction with that of factor. Possession of goods of 

 their own which they purposed to sell always biased the factors in 

 favor of their own goods; they sold these first or on the best markets 

 to the evident prejudice of the principal. Collusions of various sorts 

 and with various parties were resorted to whereby they heaped the 

 expense of their own merchant business on the account of their prin- 

 cipal or engaged in direct competition wth them.^ These abuses 

 were very prevalent among the officers of the East India and other 

 companies. A trader in India wrote in 1711: "All private trade, 



1 North, Lives, II. 452. This sort of regulation was laid by the Scots at 

 Veere, 1630-1649, requiring factors to be unmarried persons, factorage to expire 

 at marriage, and the merchants to be paid all debts due them before the factors 

 dare marry. See Davidson, 398-400. 



~ Dudley North had his brother Montagu join him at Constantinople for this 

 reason; North, Lives, II, 401. 



' Illustrative examples of these frauds at accounting are given in Savar>', Par. 

 Neg., II, 450-2. 



^ For example in 1629, see Davidson, 400-1. 



^ Douglas, Discourse concerning currency, 22, 32-33. 



" For early practices, 1624, of this kind, see Davidson, 397, quoting from C. R., 

 Ill, 164-5. 



