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government should be paid； and their bond…debts be reduced to
fifteen hundred thousand pounds； they might then； and not till
then； divide eight per cent upon their capital； and that whatever
remained of their revenues and net profits at home should be
divided into four parts； three of them to be paid into the
exchequer for the use of the public； and the fourth to be
reserved as a fund either for the further reduction of their
bond…debts； or for the discharge of other contingent exigencies
which the company might labour under。 But if the company were bad
stewards； and bad sovereigns； when the whole of their net revenue
and profits belonged to themselves； and were at their own
disposal； they were surely not likely to be better when
three…fourths of them were to belong to other people； and the
other fourth； though to be laid out for the benefit of the
company； yet to be so under the inspection and with the
approbation of other people。
It might be more agreeable to the company that their own
servants and dependants should have either the pleasure of
wasting or the profit of embezzling whatever surplus might remain
after paying the proposed dividend of eight per cent than that it
should come into the hands of a set of people with whom those
resolutions could scarce fail to set them； in some measure； at
variance。 The interest of those servants and dependants might so
far predominate in the court of proprietors as sometimes to
dispose it to support the authors of depredations which had been
committed in direct violation of its own authority。 With the
majority of proprietors； the support even of the authority of
their own court might sometimes be a matter of less consequence
than the support of those who had set that authority at defiance。
The regulations of 1773； accordingly； did not put an end to
the disorders of the company's government in India。
Notwithstanding that； during a momentary fit of good conduct；
they had at one time collected into the treasury of Calcutta more
than three millions sterling； notwithstanding that they had
afterwards extended； either their dominion； or their
depredations； over a vast accession of some of the richest and
most fertile countries in India； all was wasted and destroyed。
They found themselves altogether unprepared to stop or resist the
incursion of Hyder Ali； and； in consequence of those disorders；
the company is now （1784） in greater distress than ever； and； in
order to prevent immediate bankruptcy； is once more reduced to
supplicate the assistance of government。 Different plans have
been proposed by the different parties in Parliament for the
better management of its affairs。 And all those plans seem to
agree insupposing； what was indeed always abundantly evident；
that it is altogether unfit to govern its territorial
possessions。 Even the company itself seems to be convinced of its
own incapacity so far； and seems； upon that account； willing to
give them up to government。
With the right of possessing forts and garrisons in distant
and barbarous countries is necessarily connected the right of
making peace and war in those countries。 The joint stock
companies which have had the one right have constantly exercised
the other； and have frequently had it expressly conferred upon
them。 How unjustly； how capriciously； how cruelly they have
commonly exercised it； is too well known from recent experience。
When a company of merchants undertake； at their own risk and
expense； to establish a new trade with some remote and barbarous
nation； it may not be unreasonable to incorporate them into a
joint stock company； and to grant them； in case of their success；
a monopoly of the trade for a certain number of years。 It is the
easiest and most natural way in which the state can recompense
them for hazarding a dangerous and expensive experiment； of which
the public is afterwards to reap the benefit。 A temporary
monopoly of this kind may be vindicated upon the same principles
upon which a like monopoly of a new machine is granted to its
inventor； and that of a new book to its author。 But upon the
expiration of the term； the monopoly ought certainly to
determine； the forts and garrisons； if it was found necessary to
establish any； to be taken into the hands of government； their
value to be paid to the company； and the trade to be laid open to
all the subjects of the state。 By a perpetual monopoly； all the
other subjects of the state are taxed very absurdly in two
different ways： first； by the high price of goods； which； in the
case of a free trade； they could buy much cheaper； and； secondly；
by their total exclusion from a branch of business which it might
be both convenient and profitable for many of them to carry on。
It is for the most worthless of all purposes； too； that they are
taxed in this manner。 It is merely to enable the company to
support the negligence； profusion； and malversation of their own
servants； whose disorderly conduct seldom allows the dividend of
the company to exceed the ordinary rate of profit in trades which
are altogether free； and very frequently makes it fall even a
good deal short of that rate。 Without a monopoly； however； a
joint stock company； it would appear from experience； cannot long
carry on any branch of foreign trade。 To buy in one market； in
order to sell； with profit； in another； when there are many
competitors in both； to watch over； not only the occasional
variations in the demand； but the much greater and more frequent
variations in the competition； or in the supply which that demand
is likely to get from other people； and to suit with dexterity
and judgment both the quantity and quality of each assortment of
goods to all these circumstances； is a species of warfare of
which the operations are continually changing； and which can
scarce ever be conducted successfully without such an unremitting
exertion of vigilance and attention as cannot long be expected
from the directors of a joint stock company。 The East India
Company； upon the redemption of their funds； and the expiration
of their exclusive privilege； have right； by Act of Parliament；
to continue a corporation with a joint stock； and to trade in
their corporate capacity to the East Indies in common with the
rest of their fellow…subjects。 But in this situation； the
superior vigilance and attention of private adventurers would； in
all probability； soon make them weary of the trade。
An eminent French author； of great knowledge in matters of
political economy； the Abbe Morellet； gives a list of fifty…five
joint stock companies for foreign trade which have been
established in different parts of Europe since the year 1600； and
which； according to him； have all failed from mismanagement；
notwithstanding they had exclusive privileges。 He has been
misinformed with regard to the history of two or three of them；
which were not joint stock companies and have not failed。 But； in
compensation； there have been several joint stock companies which
have failed； and which he has omitted。
The only trades which it seems possible for a joint stock
company to carry on successfully without an exclusive privilege
are those of which all the operations are capable of being
reduced to what is called a Routine； or to such a uniformity of
method as admits of little or no variation。 Of this kind is；
first； the banking trade； secondly； the trade of insurance from
fire； and from sea risk and capture in time of war； thirdly； the
trade of making and maintaining a navigable cut or canal； and；
fourthly； the similar trade of bringing water for the supply of a
great city。
Though the principles of the banking trade may appear
somewhat abstruse； the practice is capable of being reduced to
strict rules。 To depart upon any occasion from those rules； in
consequence of some flattering speculation of extraordinary gain；
is almost always extremely dangerous； and frequently fatal； to
the banking company which attempts it。 But the constitution of
joint stock companies renders them in general more tenacious of
established rules than any private copartnery。 Such companies；
therefore； seem extremely well fitted for this trade。 The
principal banking companies in Europe； accordingly； are joint
stock companies； many of which manage their trade very
successfully without any exclusive privilege。 The Bank of England
has no other exclusive privilege except that no other banking
company in England shall consist of more than six persons。 The
two banks of Edinburgh are joint stock companies without any
exclusive privilege。
The value of the risk； either from fire； or from loss by
sea； or by capture； though it cannot； perhaps； be calculated very
exactly； admits； however； of such a gross estimation as renders
it； in some degree； reducible to strict rule and method。 The
trade of insurance； therefore； may be carried on successfull