The Hudson's Bay Company have been cited as an example of successful management on the part of a joint stock association. The fact, however, is, that their transactions are of very limited compass, and much less productive of profit than has been represented. Nei ther are they an example of the benefit of exclusive privileges, their charter, which was dated in 1670, be ing from the crown only, and not confirmed by parlia ment. It consequently contains no legal prohibition of the interference of private traders. Their transactions accordingly fall more properly under the description of well-managed partnerships, than of extensive compa nies.
Our first India company was chartered, not by par liament, but by the crown, in 1600. 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 formi dable competition. In 1701, the charter having expir ed, the public saw the unusual occurrence of two joint stock companies pursuing the same branch of com merce. In 1708, they were consolidated into one com pany, tinder their present name ; and in 1711, the com petition 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 claim to their territorial reve nue, as the its of the crown, the company bar gained for ts retention, by agreeing to pay government a sum of 400 000/. a-year. The most flattering ac counts of their finances were exhibited ; but unfortu nately their debts still continued on the increase. Great disorders prevailed in the management of their India aff.irs; and the expellee of war with lIyder Ali, reduc ed them to the necessity of applying to government for yr_ relief. Since that Lille, w4rs S, dial], and I tolknr, along with the continued disadvai tagrs inseparable from a joint stock company, have re duced their affairs to that situation, in which most as sociations of the kind have been obliged to make tl.eir exit. The complication of their accounts, and the popu lar notion of wealth still attached to the name of India. have long prevented the public from being aware of their real condition. And government, appreciating the uti lity of many of their institutions in India, as well as de sirous of as oiding a shock to public credit, have con ducted the change, now become necessary, with much delicate attention to the company. The internal govern ment of India, and the China trade, their only lucrative branch, have accordingly been left in their possession.
Such being the generalove 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 open 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 1600, all of whom have been unsuccessful. In fact, the only mercantile undertakings which it seems possible for a joint stock company to carry on advantageously with out an exclusive privilege, arc those of which all the operations arc 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, arc 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. This enumeration was 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, arc attended with no peculiar facilities beyond the excavation of a clock, a speculation not admitted into Dr Smith's list of eligible undertakings. On the other hand, the insurance of merchantmen against cap ture, is one of the most varying and difficult calcula tions in the whole circle of mercantile adventure. Wee• prefer, therefore, Dr Smith's general rule to his parti cular list, and arc disposed to infer, that as society ad vances, and the principles of different branches become better understood, the appropriation of the vast sums which characterise the capitals of joint stock compa nies, will be found to embrace a greater variety of un dertakings. It becomes in every age more generally the practice, to divide a large concern into various de partments, and to make contracts on the plan of per forming work by the piece. The consequence is a suc cession of checks, by these improved arrangements, to the mismanagement which is inseparable from a public board, so long as the conduct of affairs remains discre tionary. At the same time, the possession of exclusive privileges should be granted with a very sparing hand ; and, in a recent case of this description, the NN est India Dock Company, we have understood, that the obliga tions imposed on the trade at large have given rise to various complaints.