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, arc too bare of capital for so remote a trade as that of India, where the returns seldom conic 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 be half 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, con ducted 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. lIe enters, concisely indeed, but with much force of argument, into the various disadvantages of privileged companies. It is, he says, a bad sign in the outset, that special encouragement should be required for the purpose of giving a particular direction to a por tion of the national capital. After all that has been said of the profit attendant on a direct intercourse with such countries as India and China, does it appear, he asks, that the nations who buy tea and piece goods at second hand, pay much more for them than the original impor ters ? On making a strict analysis, it will be found that the chief profits of a privileged company are extracted from the pockets of their own countrymen. Whatever sum is paid by a consumer beyond the rate at which a free traffic would supply the article, is so much money lost to the public. Moreover, no concerns arc more liable to suffer by the langour attendant on the proceedings of a board composed of men acting for others, than the remote and complicated affairs of India. A director of
the French East India Company asked M. La Bour donnaye, " how it had happened that he had managed his own affairs so much better than those of the Com pany ?"—" The reason," said the other, " is plain ; my own affairs are managed according to the judgment formed on the spot, while, in regard to public concerns, I Nt as obliged to follow orders from a distance." In investigating the motives which have so frequently induced governments to lend themselves to the views of persons projecting' exclusive companies, we recognise the influence of two prominent reasons ; first, a prospect of gain is held forth without discovering at whose ex pence ; and, in the next place, these flattering profits may be reduced in the most plausible way to numerical calculation, while the consequent loss, being indirect, obscure, and general, wholly escapes observation. The general result of the facts and reasoning brought for ward in this article may be expressed as follows : Ex clusive privileges, if they ever were advisable, become less and less necessary as society advances. On the other hand, the exemption from unlimited responsibility, and the unrestrained permission to bring to sale a share in the property of a company, the two principal features in the constitution of a joint stock association become more and more applicable as improvements take place. Both alterations arc in correspondence with that admira ble system which an intimate knowledge of political economy opens to the mind of the attentive observer. Exclusive privileges are at variance with that liberty which constitutes the basis of trade; while the exemp tions which we have specified are merely examples of the extension of the principle. It has been thought expedient to make every partner in a private mercantile house responsible to the creditors of the concern to the last shilling of his property ; a precaution rendered neces sary by the unacquaintance of the public with the amount of property invested in the concern. But in the case of a public body, the capital is matter of notoriety, and the responsibility of the individual partners admits of limitation, without injury to the creditors of the com pany. (x)