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Regulated Companies

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REGULATED COMPANIES. Associations of merchants formed in early modern times to exploit monopolies of special branches of foreign trade. Each member of the company embarked his capital in the monopolized trade, manag ing his own business, but subject to the regulations of the company. These companies were formed on the model of the mediaeval guild (q.v.). They made rules for admission to the company, decided how great a volinne of business each member should transact, and sometimes fixed prices. The company as a body possessed property, as, for example, factories in the coun try with which they traded; but there was no idea of making profits to he distributed to the company as a whole. Through their regula tion active competition among members was ob viated, and cooperation against foreign compet itors assured. Thus it became possible to carry on trade which an isolated trader would not have ventured upon.

The earliest regulated companies were those formed by the merchants of the Hanseatic League (q.v.) for trading in England. The plan was adopted by the English merchants who first engaged in foreign trade, the Merchants of the Staple, and the Merchants Adventurers (q.v.). The regulated company was the form of organization of the Levant Company. incorpo rated in 1581, to carry on trade in the Eastern Mediterranean: the Muscovy Company (15541, of merchants trading in Russia; the Eastland Com pany. incorporated under Elizabeth, to carry on

trade with the Baltic countries. The East India Company. as originally constituted, formed a transition from the regulated to the joint-stock company. In the last named company individual members were not given a right to carry on trade on private account, but were required to trade through sub-companies, under the control of the parent company.

This form of organization was in its time distinctly superior to unregulated private trad ing, but it proved inadequate for carrying on so hazardous and extensive a trade as that with the East Indies. and was gradually supplanted by the joint-stock company. After 1012 the East India Company had abandoned the principle of the regulated company. The other companies mentioned continued to exist in their original form until the eighteenth century. In the seven teenth century they showed a tendency toward monopoly, excluding, through excessive entrance fees, traders who desired to gain membership. Hence arose a class of 'interlopers,' who traded in the monopolized region in defiance of the com pany. The minute regulations imposed upon members proved to be vexatious in the more enterprising trade of the seventeenth century, and were in large measure responsible for the de cline of the companies.