C O M P A N Y. 



Company, other government stock, r.nd exempt from "the debts 

 ""V"""' or losses attendant on mercantile adventure. In 1733, 

 the same character was given to a farther portion of 

 the stock, and in 1718 to the whole. 

 Hudson's The Hudson's Bay Company have been cited as an 



B^.y com example of successful management on the part of a 

 P all y- .joint stock association. The fact, however, is, that 



then - transactions are of '-very limited compass, and 

 much less productive of profit than has been repre- 

 sented. Neither are they an example of the benefit of 

 exclusive privileges, their charter, which was dated in 

 1670, being from the" crown only, and not confirmed 

 by parliament. It consequently contains no legal pro- 

 hibition of the interference of private traders. Their 

 transactions accordingly fall more properly under the 

 description of well-managed partnerships, than of ex- 

 tensive companies. 

 ; East India Our first India company was chartered, not by par- 

 company, diament, but by the crown, in 1 600. It became a joint- 

 stock association in 1612. In course of time, private 

 traders, questioning the legality of a charter not con- 

 firmed by parliament, ventured to interfere with their 

 commerce, and exposed them, towards the end of the 

 ■ seventeenth century, to the losses attendant on a for- 

 midable competition. In 1701, the charter having ex- 

 .pired, the public saw the unusual occurrence of two 

 joint stock companies pursuing the same branch of 

 commerce. In 1708, they were consolidated into one 

 company, under their present name; and in 17U, the 

 competition of private traders was finally removed. 

 Soon after the middle of last century, this company 

 gradually augmented their dividend from 6 to 10 per 

 cent. In 1767, government laying clainV.to their terri- 

 torial revenue, as the property of the crown, the com- 

 •pany bargained for its retention, by agreeing to pay 

 .government a sum of L. 400,000 a-year. The most 

 flattering accounts of their finances were exhibited; 

 •but unfortunately their debts still continued on the in- 

 crease. Great disorders prevailed in the management 

 -of their India affairs ; and the expence of war with 

 Hyder Ali, reduced them to the necessity of applying 

 to government for relief. Since that time, the wars 

 with Tippoo, Scindiah, and Holkar, along with the 

 continued disadvantages inseparable from a joint stock 

 company, have reduced their affairs to that situation, in 

 -which most associations of the kind have been obbged 

 to make their exit. The complication of their ac- 

 counts, and the popular notion of wealth still attached 

 to the name of India, have long prevented the public 

 from being aware of then 1 real condition. And govern- 

 ment, appreciating the utility of many of their institu- 

 tions in India, as well as desirous of avoiding a shock 

 to public credit, have conducted the change, now be- 

 come necessary, with much delicate attention to the 

 company. The internal government of India, and the 

 China trade, their only lucrative branch, have accord- 

 ingly been left in their possession. 



Such being the general, we may almost say the univer- 

 sal, lot of joint stock companies, it becomes a question, 

 whether such institutions are, under any circumstances, 

 advisable ? In the case of a new trade established with 

 a remote and barbarous nation, Dr Smith approves of a 

 temporary monopoly, on the same principle as of the 

 monopolies granted by patent for the invention of ma- 

 chinery. But on the expiration of a specified term, 

 the monopoly ought certainly to close, and the public 

 buildings that may have been found necessary, should 

 be taken over by government, the trade being laid 

 ©pen to the public at large. The Abbe Morellet gives a 



list of fifty-five joint stock companies for foreign trade, 

 established in different countries of Europe since lfiOO 

 all of whom have been unsuccessful. In fact, the only 

 mercantile undertakings winch it seems possible for a 

 joint stock company to carry on advantageously with- 

 out an exclusive privilege, are those of which all the 

 operations are capable of being reduced to mere rou- 

 tine, that is, to the application of a few plain and con- 

 stant rules. The branches enumerated by Dr Smith 

 as coming under this description, are four in number : 



banking— insurance from fire, sea risk, and capture 



the making of navigable canals — and, lastly, the sup- 

 plying a great city with water. Tliis enumeration v. as 

 apparently suggested, more by an observation of the 

 branches which had actually succeeded in England, 

 than by any deduction from previous reasoning. The 

 making of a navigable canal, or of extensive water- 

 pipes, are attended with no peculiar facilities beyond 

 the excavation of a dock, a speculation not admitted 

 into Dr Smith's list of eligible undertakings. On the 

 other hand, the insurance of merchantmen against 

 capture, is one of the most varying and difficult calcu- 

 lations in the whole circle of mercantile adventure. 

 We prefer, therefore, Dr Smith's general rule to his 

 particular list, and are disposed to infer, that as socie- 

 ty advances, and the principles of different branches 

 become better understood, the appropriation of the vast 

 sums which characterise the capitals of joint stock 

 companies, will be found to embrace a greater variety 

 of undertakings. It becomes in every age more gene- 

 rally the practice, to divide a large concern into va- 

 rious departments, and to make contracts on the plan 

 of performing work by the piece. The consequence 

 is a succession of checks, by these improved arrange- 

 ments, to the mismanagement which is inseparable 

 from a public board, so long as the conduct of affairs 

 remains discretionary. At the same time, the posses- 

 sion of exclusive privileges should be granted with a 

 very sparing hand ; and, in a recent case of this de- 

 scription, the West India Dock Company, we have un- 

 derstood, that the obligations imposed on the trade at 

 large have given rise to various complaints. 



In looking around to our continental neighbours, we 

 see frequent examples of loss incurred in consequence 

 of joint stock associations undertaking branches of trade 

 unsuitable to the circumstances of their respective coun- 

 tries. Sweden and Denmark, for example, are too bare 

 of capital for so remote a trade as that of India, where 

 the returns seldom come round in less than two years. 

 Their true policy would be to occupy themselves with 

 a traffic in their own neighbourhood, and with coun- 

 tries such as England and Holland, where the risk is 

 small, and the payment prompt. The arguments in 

 behalf of joint-stock companies, founded on the plea of 

 an impossibility of otherwise managing the trade, should 

 be received with great caution. The Portuguese, cer- 

 tainly not the most temperate of European nations, 

 conducted the India trade above a century on the plan 

 of separate adventure. In China, accounted the most 

 difficult of all countries to manage, the Americans of 

 the present day find no particular inconvenience from 

 dispensing with the regulations of a united company. 

 M. Say, one of the most enlightened disciples of Dr 

 Smith, in admitting (vol. ii. p. 196) the peculiarity of 

 Chinese customs, maintains, that individual merchants 

 are just as likely to behave with the requisite cau- 

 tion, as the officers or agents of an established associa- 

 tion. He enters, concisely indeed, but with much 

 force of argument, into the various disadvantages of 



Com 



pany. 



