COMPANY, in a commercial sense, is a society of merchants, mechanics, or other traders joined together in one common interest.
The mechanics of all corporations, or towns incorporated, are thus erected into companies, with privileges and large immunities bestowed on them by royal charter. The original object of these associations was the protection and advancement of trade; and they might have answered some useful purposes in the rude age in which they were established. But they have long ceased to be useful; and, so far from promoting, they tend to obstruct the progress of industry. The privilege which they possessed of enacting bye-laws for the regulation of their own members, enabled them to pass rules for the purpose of maintaining a strict monopoly of their trade. No one was at liberty within the city over which their authority extended, to exercise his calling without becoming a freeman of the corporation, and paying the necessary dues, which were often so high as to prevent a workman from ever prosecuting his business as a master. The restraints imposed by these corporations have been greatly modified in practice, by the extension of towns beyond the original limit of their privileges; and in the suburbs, which are frequently larger than the town itself, there are no restraints on the freedom of industry. Artificers may there commence business without being free of any corporation; and thus the principle of competition is maintained in practice in spite of the exclusive spirit of these corporations or companies.
Company, however, seems more particularly appropriated to those grand associations set on foot for carrying on commerce with the remote parts of the world, and vested by charter with peculiar privileges.
When companies do not trade upon a joint stock, but are obliged to admit any person properly qualified, upon paying a certain fine, and agreeing to submit to the regulations of the company, each member trading upon his own stock and at his own risk, they are called Regulated Companies. When they trade upon a joint stock, each member sharing in the common profit or loss in proportion to his share in this stock, they are called Joint Stock Companies. Such companies, whether regulated or joint stock, sometimes have and sometimes have not exclusive privileges.
1. Regulated Companies resemble in every respect the corporations of trades, so common in the cities and towns of all the different countries of Europe, and are a sort of enlarged monopolies of the same kind. As no inhabitant of a town can exercise an incorporated trade without first obtaining his freedom in the corporation; so in most cases no subject of the state can lawfully carry on any branch of foreign trade for which a regulated company is established, without first becoming a member of that company. The monopoly is more or less strict, according as the terms of admission are more or less difficult, and according as the directors of the company have more or less authority, or have it more or less in their power to manage in such a manner as to confine the greater part of the trade to themselves and their particular friends. In the most ancient regulated companies the privileges of apprenticeship were the same as in other corporations; and entitled the person who had served his time to a member of the company to become himself a member, either without paying any fine, or upon paying a much smaller one than what was exacted from other people. The usual corporation spirit, wherever the law does not restrain it, prevails in all regulated companies. When they have been allowed to act according to their natural genius, they have always, in order to confine the competition to as small a number of persons as possible, endeavoured to subject the trade to many burdensome regulations. When the law has restrained them from doing this, they have become altogether useless and insignificant.
The regulated companies which were formerly established in Britain now exist only in name; and they do not in practice maintain a monopoly in any branch of trade. They are principally, the Hamburg Company, the Russia Company, the Eastland Company, the Turkey Company, the African Company, and the Hudson's Bay Company.
1. The Hamburg Company was first incorporated by Edward I. in 1296, and established again by charter in 1406, under the reign of King Henry IV. who granted all the merchants of his states, particularly those of Calais, then in his hands, a power of associating themselves into a body politic, with directors and governors, both in England and abroad, to hold assemblies, both for the direction of business and the deciding of controversies among merchants, make laws, punish delinquents, and impose moderate duties and taxes on merchandises and merchants to be employed in the service of the corporation. These few articles of the charter of Henry IV. were afterwards much augmented by many of his successors; among others by Henry VII., who first gave them the title of Merchant-adventurers to Calais, Holland, &c., gave them a power of proclaiming and continuing free fairs at Calais, and ordered that, to be reputed a member of the society, each person pay twenty marks sterling; and that the several members should attend the general meetings or
courts appointed by the directors, whether at London, Calais, or elsewhere.
A petition being made to Queen Elizabeth, in 1564, for an explanation of certain articles in the charter of Henry VII., and a confirmation of the rest granted by other kings, that princess, by a charter of the same year, declares that, to end all disputes, they shall be incorporated anew, under the title of the Company of Merchant-adventurers of England; that all who were members of the former company should, if they desired it, be admitted members of this; that they should have a common seal; that they should admit into their society what other persons, and on what terms, they pleased, and expel them again on misbehaviour; that the city of Hamburg and neighbouring cities should be reputed within their grant, together with those of the Low Countries, &c. in that of the former company; that no member should marry out of the kingdom, nor purchase lands, &c. in any city beyond sea; and that those who do so shall be, ipso facto, excluded for ever. Twenty-two years after this first charter, Queen Elizabeth granted them a second, confirming the former, and further granting them a privilege of exclusion, with a power of erecting in each city within their grant a standing council.
The revolutions which happened in the Low Countries towards the end of the sixteenth century, and which laid the foundation of the republic of Holland, having hindered the company from continuing their commerce with their ancient freedom, it was obliged to turn it almost wholly to the side of Hamburg, and the cities on the German ocean; from which change some people took occasion to change its name to that of the Hamburg Company, though the ancient title of Merchant-adventurers is still retained in all their writings.
About the middle of the last century the fine for admission was fifty, and at one time one hundred pounds, and the conduct of the company was said to be extremely oppressive. In 1643, in 1645, and in 1661, the clothiers and free traders of the west of England complained of them to parliament, as of monopolists who confined the trade and oppressed the manufactures of the country. Though these complaints produced no act of parliament, they had probably intimidated the company so far as to oblige them to reform their conduct, and the trade was finally laid open by William III.
2. The Russia Company was first projected towards the end of the reign of King Edward VI., constituted in the first and second years of Philip and Mary; and its charter was confirmed by act of parliament under Queen Elizabeth in 1566. It had its rise from certain adventurers who were sent in three vessels for the discovery of new countries, and to find out a north-east passage to China. These, falling into the White Sea, and making up to the port of Archangel, were exceedingly well received by the Muscovites; and at their return solicited letters patent, to secure to themselves the commerce of Russia, for which they had formed an association.
By their charter the association was declared a body politic, under the name of the Company of Merchant-adventurers of England, for the discovery of lands, territories, islands, &c. unknown or unfrequented. Their privileges were, to have a governor, four consuls, and twenty-four assistants, for their commerce; for their policy, to make laws, inflict penalties, send out ships to make discoveries, take possession of them in the king's name, set up the banner royal of England; and, lastly, the exclusive privilege of trading to Archangel, and other ports of Muscovy not yet frequented by the English.
This charter was confirmed by parliament in the eighth year of Queen Elizabeth, wherein it was enacted, that in
Company. regard the former name was too long, they should now be called Company of English Merchants for discovering new Trades; under which name they should be capable of acquiring and holding all kinds of lands, manors, rents, &c. not exceeding one hundred marks per annum, and not held of her majesty; that no part of the continent, island, harbour, &c. not known or frequented before the first enterprise of the merchants of their company, situated to the north, or north-west, or north-east of London, nor any part of the continent, islands, &c. under the obedience of the emperor of Russia, or in the countries of Armenia, Media, Hyrcania, Persia, or the Caspian Sea, should be visited by any subjects of England to exercise any commerce, without the consent of the said company, on pain of confiscation. The said company shall use no ships in her new commerce but those of the nation, nor transport any cloths, serges, or other woollen stuffs, till they have been dyed and pressed. That in case the company discontinue of itself to unload commodities in the road of the abbey of S. Nicholas, in Russia, or some other port on the north coasts of Russia, for the space of three years, the other subjects of England shall be allowed to traffic to Narva, while the said company discontinues its commerce into Russia, only using English vessels.
This company subsisted with reputation almost a whole century, till the time of the civil wars. It is said the czar then reigning, hearing of the murder of King Charles I., ordered all the English in his states to be expelled; which the Dutch taking advantage of, settled in their room. After the Restoration, the remains of the company re-established part of their commerce at Archangel, but never with the same success as before, the Russians being now well accustomed to the Dutch merchants and merchandise.
This company subsists still, under the direction of a governor, four consuls, and assistants. By the 10th and 11th of William III. c. 6, the fine for admission was reduced to L.5. As the company, however, possesses no powers, and confers no advantages, it may be said to exist merely in name.
3. The Eastland Company was incorporated by Queen Elizabeth. Its charter is dated in the year 1579. By the first article the company is erected into a body politic, under the title of the Company of Merchants of the East; to consist of Englishmen, all real merchants, who have exercised the business thereof, and trafficked through the Sound before the year 1568, into Norway, Sweden, Poland, Livonia, Prussia, Pomerania, &c.; as also Revel, Königsberg, Dantzic, Copenhagen, &c.; excepting Narva, Muscovy, and its dependencies. They were invested with the usual prerogatives of such companies, as a seal, governor, courts, laws, &c.
The premium for admission into this company was L.6 13s. 6d.; and no merchant residing in London could be admitted a member, unless he were free of the city. The charter of this company was confirmed by Charles II. in 1629. But it was complained of as a monopoly, and first curtailed by legal authority in 1672; and since the declaration of rights in 1689 it exists only in name, but still continues to elect its annual officers, namely, a governor, a deputy, and twenty-four assistants.
4. The Turkey or Levant Company had its rise under Queen Elizabeth in 1581. James I. confirmed its charter in 1605, adding new privileges. During the civil wars there happened some innovations in the government of the company; many persons having been admitted members, not qualified by the charters of Queen Elizabeth and King James, or that did not conform to the regulations prescribed. Charles II. upon his restoration, endeavoured to set it upon its ancient basis; to which end he gave them a charter, containing not only a confirmation of their
old one, but also several new articles of reformation. By this the company is erected into a body politic, capable of making laws, &c., under the title of the Company of Merchants of England trading to the seas of the Levant. The number of members is not limited, but is ordinarily about three hundred. The principal qualification required is, that the candidate be a freeman of London, and a wholesale merchant, either by family or by serving an apprenticeship of seven years. Those under twenty-five years of age pay L.25 sterling at their admission; those above, twice as much. The fine was reduced by act of parliament in 1753 to L.20, and the privilege of admission extended to every British subject.
The company has a court or board at London, which is composed of a governor, deputy-governor, and fifteen directors or assistants; but it exists only in name. It has no power to restrain any private adventurer from trading to Turkey; and hence, in point of fact, the trade is free.
5. The Company of Merchants trading to Africa, established in 1750. This company succeeded that called the Royal African Company, which traded upon a joint stock with an exclusive privilege. Though England began to trade to Africa as early as the year 1536, and several voyages were made to Guinea in 1538 and some following years, for the importation of gold and elephants' teeth, nothing like a company was formed till the year 1588, when Queen Elizabeth granted a patent of exclusive privilege to certain persons for ten years. In 1618, King James I. established a company by charter, which was soon dissolved. Another company was erected by charter of Charles I. in 1631, which met with little success; but the demand for negroes in the English American plantations increasing, a third company was established by a charter granted in 1662, in favour of the Duke of York, securing to him the commerce of all the country, coasts, islands, &c. belonging to the crown of England, or not possessed by any other Christian prince, from Cape Blanco, in 20 degrees north latitude, to the Cape of Good Hope, in 34 degrees 34 minutes south latitude. The charter was soon after returned into the king's hands by the duke, and revoked, by consent of the parties associated with him in the enterprise; in consequence of which, the fourth and last exclusive company was established and incorporated by letters patent in 1672, under the title of the Royal African Company. A capital was soon raised of L.111,000; and this new company improved their trade and increased their forts; but after the revolution in 1689 this trade was laid open. In 1698, all private traders to Africa were obliged by statute 9 and 10 William, to pay ten per cent., in order to assist the company in maintaining their forts and factories. But notwithstanding this heavy tax, the company were still unable to maintain the competition; their stock and credit gradually declined. In 1712, their debts had become so great that a particular act of parliament was thought necessary, both for their security and for that of their creditors. It was enacted, that the resolution of two thirds of these creditors in number and value should bind the rest, both with regard to the time which should be allowed to the company for the payment of their debts, and with regard to any other agreement which it might be thought proper to make with them concerning those debts. In 1730 their affairs were in so great disorder that they were altogether incapable of maintaining their forts and garrisons, the sole purpose and pretext of their institution. From that year till their final dissolution, the parliament judged it necessary to allow the annual sum of L.10,000 for that purpose. In 1732, after having been for many years losers by the trade of carrying negroes to the West Indies, they at last resolved to give it up altogether; to sell to the private tra-
any. ders to America the negroes which they purchased upon the coast; and to employ their servants in a trade to the inland parts of Africa for gold dust, elephants' teeth, dyeing drugs, &c. But their success in this more confined trade was not greater than in their former extensive one. Their affairs continued to go gradually to decline, till at last, being in every respect a bankrupt company, they were dissolved by act of parliament, and their forts and garrisons vested in the present Regulated Company of Merchants trading to Africa.
Contrary to the former practice with regard to regulated companies, who were reckoned unfit for such sort of service, this company was subjected to the obligation of maintaining forts and garrisons. It was expressly charged at first with the maintenance of all the British forts and garrisons that lie between Cape Blanc and the Cape of Good Hope, and afterwards with that of those only which lie between Cape Rouge and the Cape of Good Hope. The act which establishes this company (the 23d of George II. c. 31) seems to have had two distinct objects in view: first, to restrain effectually the oppressive and monopolizing spirit which is natural to the directors of a regulated company; and, secondly, to force them as much as possible to give an attention, which is not natural to them, towards the maintenance of forts and garrisons.
With a view to the first of these objects, the fine for admission into the company was limited to 40s. The company is prohibited from trading in their corporate capacity, or upon a joint stock; from borrowing money upon common seal, or from laying any restraints upon the trade, which may be carried on freely from all places, and by all persons being British subjects and paying the fine.
For the second purpose mentioned, the maintenance of the forts and garrisons, an annual sum was allotted to them by parliament. In 1730 a sum of L.10,000 was granted for this purpose; and in 1744, owing to the war, this sum was increased to L.20,000; and every year a sum was annually appropriated to their use. By the 4th Geo. III. c. 20, Fort Senegal and all its dependencies were vested in the company; but by 5th Geo. III. c. 44, not only Senegal and all its dependencies, but the whole coast from the Fort of Sallee, in South Barbary, to Cape Rouge, was exempted from the jurisdiction of the company, and vested in the crown.
II. JOINT-STOCK COMPANIES, established either by royal charter or by act of parliament, differ in several respects, not only from regulated companies, but from private copartnerships. 1. In a private copartnership, no partner, without the consent of the company, can transfer his share to another person, or introduce a new member into the company. Each member, however, may, upon proper warning, withdraw from the copartnership, and demand payment from them of his share of the common stock. In a joint-stock company, on the contrary, no member can demand payment of his share from the company; but each member can, without their consent, transfer his share to another person, and thereby introduce a new member. The value of a share in a joint stock is always the price which it will bring in the market; and this may be either greater or less, in any proportion, than the sum which its owner stands credited for in the stock of the company. 2. In a private copartnership, each partner is bound for the debts contracted by the company, to the whole extent of his fortune. In a joint-stock company, on the contrary, each partner is bound only to the extent of his share.
The trade of a joint-stock company is always managed by a court of directors. This court indeed is frequently subject, in many respects, to the control of a general court of proprietors. But the greater part of these proprietors seldom pretend to understand any thing of the business
of the company, and, when the spirit of faction happens not to prevail among them, give themselves no trouble about it, but receive contentedly such half-yearly or yearly dividend as the directors think proper to make to them. This total exemption from trouble and from risk, beyond a limited sum, encourages many people to become adventurers in joint-stock companies, who would upon no account hazard their fortunes in any private copartnership. Such companies, therefore, commonly draw to themselves much greater stocks than any private copartnership can boast of. The trading stock of the South Sea Company at one time amounted to upwards of thirty-three millions eight hundred thousand pounds. The directors of such companies, however, being the managers rather of other people's money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnership frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail more or less in the management of the affairs of such a company. It is upon this account that joint-stock companies for foreign trade have seldom been able to maintain the competition against private adventurers. They have, accordingly, very seldom succeeded without an exclusive privilege; and frequently have not succeeded with one. Without an exclusive privilege, they have commonly mismanaged the trade; with an exclusive privilege, they have both mismanaged and confined it.
The principal joint-stock companies presently subsisting in Great Britain are, the South Sea Company and the East India Company; to which may be added, though of very inferior magnitude, the Hudson's Bay Company.
1. The South Sea Company. During the long war with France in the reign of Queen Anne, the payment of the sailors of the royal navy being neglected, they received tickets instead of money, and were frequently obliged, by their necessities, to sell these tickets to avaricious men at a discount of forty, and sometimes fifty per cent. By this and other means, the debts of the nation unprovided for by parliament, and which amounted to L.9,471,321, fell into the hands of these usurers. On which Mr Harley, at that time chancellor of the exchequer, and afterwards Earl of Oxford, proposed a scheme to allow the proprietors of these debts and deficiencies six per cent. per annum, and to incorporate them for the purpose of carrying on a trade to the South Sea; and they were accordingly incorporated under the title of "the Governor and Company of Merchants of Great Britain trading to the South Seas, and other parts of America, and for encouraging the Fishery," &c. Though this company seemed formed for the sake of commerce, the ministry never thought seriously during the course of the war about making any settlement on the coast of South America, which was what flattered the expectations of the people; nor was it ever carried into execution by this company.
Some other sums were lent to the government in the reign of Queen Anne at six per cent. In the third of George I. the interest of the whole was reduced to five per cent. and the company advanced two millions more to the government at the same interest. By the statute of the 6th of George I. it was declared that they might redeem all or any of the redeemable national debts; in consideration of which the company were empowered to augment their capital according to the sums they should discharge; and for enabling them to raise such sums for purchasing annuities, exchanging for ready money new exchequer bills, carrying on their trade, &c. they might, by such
Company. means as they should think proper, raise such sums of money as in a general court of the company should be judged necessary. The company were also empowered to raise money on the contracts, bonds, or obligations under their common seal, on the credit of their capital stock. But if the sub-governor, deputy-governor, or other members of the company, should purchase lands or revenues of the crown upon account of the corporation, or lend money by loan or anticipation of any branch of the revenue, other than such part only on which a credit of loan was granted by parliament, such sub-governor or other member of the company should forfeit treble the value of the money so lent.
The fatal South Sea scheme, transacted in the year 1720, was executed upon the last-mentioned statute. The company had at first set out with good success, and the value of their stock for the first five years had risen faster than that of any other company; and his majesty, after purchasing L.10,000 stock, had condescended to be their governor. Things were in this situation, when, taking advantage of the above statute, the South Sea bubble was projected. The pretence was, to raise a fund for carrying on a trade to the South Sea, and purchasing annuities, &c. paid to the other companies; and proposals were printed and distributed, showing the advantages of this design. The sum necessary for carrying it on, together with the profits that were to arise from it, were divided into a certain number of shares or subscriptions, to be purchased by persons disposed to adventure therein. And the better to carry on the deception, the directors engaged to make very large dividends; and actually declared that every L.100 original stock would yield L.50 per annum, which occasioned so great a rise of their stock, that a share of L.100 was sold for upwards of L.800. This was in the month of July; but before the end of September it fell to L.150, by which multitudes were ruined, and such a scene of distress occasioned as is scarcely to be conceived. But the consequences of this infamous scheme are too well known; most of the directors were severely fined, to the loss of nearly all their property. Some of them had no hand in the deception, nor gained a farthing by it; but it was agreed that they ought to have opposed and prevented it.
The South Sea Company never had any forts or garrisons to maintain, and therefore were entirely exempted from one great expense, to which other joint-stock companies for foreign trade are subject. But they had an immense capital divided among an immense number of proprietors. It was naturally to be expected, therefore, that folly, negligence, and profusion should prevail in the whole management of their affairs.
Their stock-jobbing speculations were succeeded by mercantile projects, which, Dr Smith observes, were not much better conducted. The first trade which they engaged in was that of supplying the Spanish West Indies with negroes, of which, in consequence of what was called the Assiento contract granted them by the treaty of Utrecht, they had the exclusive privilege. But as it was not expected that much could be made by this trade, both the Portuguese and French companies, who had enjoyed it upon the same terms before them, having been ruined by it, they were allowed, as compensation, to send annually a ship of a certain burden to trade directly to the Spanish West Indies. Of the ten voyages which this annual ship was allowed to make, they are said to have gained considerably by one, that of the Royal Caroline in 1731, and to have been losers, more or less, by almost all the rest. Their ill success was imputed, by their factors and agents, to the extortion and oppression of the Spanish government; but was, perhaps, principally owing to the pro-
fusion and depredations of those very factors and agents, some of whom are said to have acquired great fortunes even in one year. In 1734, the company petitioned the king that they might be allowed to dispose of the trade and tonnage of their annual ship, on account of the little profit which they made by it, and to accept of such equivalent as they could obtain from the king of Spain.
In 1724 this company had undertaken the whale-fishery. Of this, indeed, they had no monopoly; but as long as they carried it on, no other British subjects appear to have engaged in it. Of the eight voyages which their ships made to Greenland, they were gainers by one, and losers by all the rest. After their eighth and last voyage, when they had sold their ships, stores, and utensils, they found that their whole loss, upon this branch, capital and interest included, amounted to upwards of L.237,000.
In 1722 this company petitioned the parliament to be allowed to divide their immense capital of more than L.33,800,000, the whole of which had been lent to government, into two equal parts; the one half, or upwards of L.16,900,000, to be put upon the same footing with other government annuities, and not to be subject to the debts contracted, or losses incurred, by the directors of the company, in the prosecution of their mercantile projects; the other half to remain, as before, a trading stock, and to be subject to those debts and losses. The petition was too reasonable not to be granted. In 1733 they again petitioned the parliament that three fourths of their trading stock might be turned into annuity stock, and only one fourth remain as trading stock, or exposed to the hazards arising from the bad management of their directors. Both their annuity and trading stocks had by this time been reduced more than L.2,000,000 each, by several different payments from government, so that this fourth amounted only to L.3,662,784. 8s. 6d. In 1748 all the demands of the company upon the king of Spain, in consequence of the Assiento contract, were, by the treaty of Aix-la-Chapelle, given up for what was supposed an equivalent. An end was put to their trade with the Spanish West Indies, the remainder of their trading stock was turned into an annuity stock, and the company ceased in every respect to be a trading company.
This company is under the direction of a governor, sub-governor, deputy-governor, and twenty-one directors; but no person is qualified to be governor, his majesty excepted, unless such governor has in his own name and right L.5000 in the trading stock; the sub-governor is to have L.4000, the deputy-governor L.3000, and a director L.2000, in the same stock. In every general court, every member having in his own name and right L.500 in trading stock, has one vote; if L.2000, two votes; if L.3000, three votes; and if L.5000, four votes.
2. The East India Company. See INDIA.
3. Hudson's Bay Company. The vast countries which surround Hudson's Bay abound with animals whose furs and skins are excellent, being far superior in quality to those found in less northerly regions. In 1670, a charter was granted to a company, which does not consist of above nine or ten persons, for the exclusive trade to this bay. They erected several forts, viz. Prince of Wales fort, Churchill river, Nelson, New Severn, and Albany, which stand on the west side of the bay, and are garrisoned by 186 men. The French, in May 1782, took and destroyed these forts, and the settlements, &c. valued at L.500,000. This company long carried on a lucrative and flourishing trade; they exchanged the manufactures or luxuries of Europe with the Indians for furs, which article they sold at high prices in Europe, and thus they gained large profits. They were at length rivalled in their trade by the famous North-West Company, whose servants, cou-
any sisting of boatmen and others, displayed singular activity and enterprise in collecting furs, in search of which they penetrated the remote and frozen deserts of the American continent; and by their superior activity acquired a far more extensive trade than the Hudson's Bay Company. At a later period, when Lord Selkirk became a partner of the company, a very keen rivalry was carried on between the two establishments, which gave rise to scenes of violence and to sanguinary contests between their servants, when they happened to encounter each other in the remote deserts and woods, far beyond the precincts of legal authority. This state of hostility was terminated in 1821, by the coalition of the rival companies, namely, the Hudson's Bay Company and the North-West Company, by whose united capital the fur trade is now carried on to a great extent.