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measures. And certainly, if the reasoning upon which our restrictions have been defended is worth any thiny, it will apply in behalf of the regulations of foreign states against 118.. They insist upon our superiority in capital and machinery, as we do upon their comparative exemption from taxation, and with equal foundation.
**That nothing would tend more to counteract the commercial hostility of foreign states, than the adoption of a more enlightened and more conciliatory policy on the part of this country.
* That although, as a matter of mere diplomacy, it may sometimes answer to hold the removal of particular prohibitions, or high duties, as depending upon corresponding concessions by other states in our favour, it does not follow that we should maintain our restrictions in cases where the desired concessions on their part cannot be obtained. Our restrictions would not be the less prejudicial to our own capital and industry, because other governments persisted in preserving impoliti regulations.
That, upon the whole, the most liberal would prove to be the most polític course on such occasions. “ That independent of the direct benefit to be derived by this country, on every occasion of such concession or relaxation, a great incidental object would be gained, by the recognition of a sound principle or standard, to which all subsequent arrangements might be referrel; and by the salutary intluence which a promulgation of such just views, by the legislature and by the nation at large, could not fail to have on the policy of other states.
" That in thus declaring, as your petitioners do, their conviction of the inpolicy and injustice of the restrictive system, and in desiring every practicable relaxation of it, they have in view only such parts of it as are not connected, or are only subordinately so, with the public revenue. As long as the necessity for the present amount of revenue subsists, your petitioners cannot expect so important a branch of it as the customs to be given up, nor to be materially diminished, unless some substitute less objectionable be suggested. But it is against every restrictive regulation of trade, not essential to the revenue, against all duties werely protective from foreign competition, and against the ercess of such duties as are partly for the purpose of revenue, and partly for that of protection, that the prayer of the present petition is respectfully submitted to the wisdom of parliament.
May it therefore," &c.
For examples of the practical working and injurious operation of restrictions, see the articles BORDEAUX, Cadiz, CagliaRI, COLONY TRADE, Corn LAWS AND CORN Trade, Naples, TIMBER, &c., in this Dictionary; the articles on the American Tariff and the French Commercial System in Nos. 96. and 99. of the Edinburgh Review ; the petition and Memoire a l’Appui, addressed, in 1828, by the landowners and merchants of the Gironde to the Chamber of Deputies. &c. &c.
For an account of the doctrines with respect to the balance of trade, and the importation and exportation of the precious metals, see the articles BALANCE OF TRADE, and EXCHANGE.
For an account of the articles exported from and imported into Great Britain, see IMPORTS AND EXPORTS.
COMPANIES. In commerce or the arts, a company is a number of persons associated for the purpose of carrying on some commercial or industrious undertaking. When there are only a few individuals associated, it is most commonly called a copartnery; the term company being usually applied to large associations, like the East India Company, the Bank of England, &c., who conduct their operations by means of agents acting under the orders of a Board of directors.
Companies have generally been divided into two great classes exclusive or joint stock companies, and open and regulated companies.
1. Erclusive or Joint Stock Companies. — By an institution of this sort is meant company having a certain amount of capital, divided into a greater or smaller number of transferable shares, managed for the common advantage of the shareholders by a body of directors chosen by and responsible to them. After the stock of a company of this sort has been subscribed, no one can enter it without previously purchasing one or more shares belonging to some of the existing members. The partners do nothing individually; all their resolutions are taken in common, and are carried into effect by the directors and those whom they employ.
According to the common law of England, all the partners in a joint stock company are jointly and individually liable, to the whole extent of their fortunes, for the debts of the company. They may make arrangements amongst themselves, limiting their obligations with respect to each other; but unless established by an authority competent to set aside the general rule, they are all indefinitely responsible to the public. Parliament sometimes limits the responsibility of the shareholders in joint stock companies established by statute, to the amount of the shares they respectively hold. Charters of incorporation granted by the Crown were also, until lately, supposed necessarily to have this effect ; but by the acı 6 Geo. 4. c. 96. the Crown is empowered to grant charters of incorporation by which the members of corporate bodies may be made individually liable, to such extent, and subject to such regulations and restrictions, as may be deemed expedient. Hence charters are now frequently granted for the purpose merely of enabling companies to sua and be sued in courts of law, under the names of some of their office-bearers, without in any respect limiting the responsibility of the shareholders to the public. This limitation cannot be implied in a charter any more than in an act of parliament, and will be held not to exist unless it be distinctly set forth.
“In a private copartnery, no partner, without the consent of the company, can transfer bis share to another person, or introduce a new member into the company. Each member, however, may, upon proper warning, withdraw from the copartnery, and demand payment from them of his share of the common stock. In a joint stock com
pany, on the contrary, no member can demand payment of his share from the company; but each member may, 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.” -( Wealth of Nations, p. 333.)
2. Utility of Joint Stock Companies. - Whenever the capital required to carry on any undertaking exceeds what may be furnished by an individual, it is indispensable, in order to the prosecution of the undertaking, that an association should be formed. In all those cases, too, in which the chances of success are doubtful, or where a lengthened period must necessarily elapse before an undertaking can be completed, an individual, though ready enough to contribute a small sum in connection with others, would, generally speaking, be very little inclined, even if he had the means, to encounter the whole responsibility of such enterprises. Hence the necessity and advantage of companies or associations. It is to them that we are indebted for those canals and railways by which every part of the country is intersected, for the formation of so many noble docks and warehouses, for the institution of our principal banks and insurance offices, and for many other establihments of great public utility carried on by the combined capital and energies of large bodies and individuals.
3 Brunches of Industry, for the Prosecution of which Joint Stock Companies may be advantageously established.. - In order to ensure a rational prospect of success to a company, the undertaking should admit of being carried on according to a regular systematic plan. The reason of this is sufficiently obvious. The business of a great association must be conducted by factors or agents; and unless it be of such a nature as to admit of their duties being clearly pointed out and defined, the association would cease to have any effectual control over them, and would be, in a great measure, at their merey. An individual who manages his own affairs reaps all the advantage derivable from superior skill, industry, and economy; but the agents, and even directors of joint stock companies labour, in most cases, entirely or principally for the advantage of others; and cannot therefore, however conscientious, have the same powerful motives to act with energy prudence, and economy. “Like," says Dr. Smith, “the stewards of a rich man, they are apt to consider attention to small matters as not for their masters' 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 also not unfrequently happens that they suffer from the bad faith, as well as the carelessness and extravagance of their servants; the latter having in many instances endeavoured to advance their own interests at the expense of their employers. Hence the different success of companies whose business may be conducted according to a nearly uniform system, — such as dock, canal, and insurance companies, railroad companies, &c., - and those whose business does not admit of being reduced to any regular plan, and where much must always be left to the sagacity and enterprise of those employed. All purely commercial companies, trading upon a joint stock, belong to the latter class. Not one of them has ever been able to withstand the competition of private adventurers; they cannot subject the agents they employ to buy and sell commodities in distant countries to any effectual responsibility; and from this circumstance, and the abuses that usually insinuate themselves into every department of their management, no such company has ever succeeded, unless when it has obtained some exclusive privilege, or been protected from competition.
The circumstances now mentioned would seem to oppose the most formidable obstacles to the success of the companies established in this country for the prosecution of mining in America. This business does not admit of being reduced to a regular routine system. Much must always depend on the skill and probity of the agents employed at the mines; and it must plainly be very difficult, if not quite impossible, for directors resident in London to exercise any effectual surveillance over the proceedings of those who are at so great a distance.
Hence it is not at all likely that these establishments will ever be so productive to the undertakers, as if they had been managed by the parties themselves.
The Abbé Morellet has given, in a tract published in 1769 (Examen de la Réponse de M. N., pp. 35–38.), a list of 55 joint stock companies, for the prosecution of various branches of foreign trade, established in different parts of Europe since 1600, every one of which had failed, though most of them had exclusive privileges. Most of those that have been established since the publication of the Abbé Morellet's tract have had a similar fate.
But notwithstanding both principle and experience concur in showing how very ill fitted a large association is for the purpose of prosecuting commercial undertakings, there are cases in which they cannot be prosecuted except by associations of this sort, and when it may be expedient to grant them certain peculiar privileges. When, owing either to the disinclination or inability of government to afford protection to those engaged in any
particular department of trade, they are obliged to provide for their own defence and security, it is obviously necessary that they should have the power to exclude such indi. viduals as may refuse to submit to the measures, or to bear their due share of the expense, required for the common protection of all. The Russian Company, the East India Company, the Levant or Turkey Company, and most of the other great trading companies which have existed in this country, seem principally to have grown out of a i eal or supposed necessity of this sort. It was not believed that any safe or advantageous intercourse could be carried on with barbarous countries without the aid of ships of war, factories, interpreters, &c. And as government was not always able or willing to afford this assistance, the traders were formed into companies or associations, and vested with such peculiar privileges as appeared to be necessary for enabling them to prosecute the trade without any extrinsic support. “When," says Dr. Smith, “ 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 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 deterinine; 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.” – (Wealth of Nations, p. 339.)
It may be doubted, however, whether it be really necessary, even in such a case as that now mentionel, to establish a joint stock company with peculiar privileges, and whether the same thing might not be more advantageously effected by the establishment of an open or regulated company.
4. Open or Regulated Companies. The affairs of such companies or associations are managed by directors appointed by the members. They do not, however, possess a common or joint stock. Each individual pays a fine upon entering into the company, and most commonly an annual contribution: a duty applicable to the business of the company is also sometimes charged upon the goods imported and exported from and to the countries with which they trade. The sums so collected are applied by the directors to fit out ambassadors, consuls, and such public functionaries as may be required to facilitate commercial dealings, or to build factories, maintain cruisers, &c. The members of such companies trade upon their own stock, and at their own risk. So that when the fine, or the sum payable on admission into a regulated company, is moderate, it is impossible for its members to form any combination that would have the effect of raising their profits above the common level; and there is the same keen and close competition amongst them that there is amongst other classes of traders. A regulated company is, in fact, a device for making those engaged in a particular branch of trade bear the public or political expenses incident to it, at the same time that it leaves them to conduct their own business with their own capital, and in their own way.
Should, therefore, government at any time refuse, or be unable to afford, that protection to those engaged in any branch of trade which is necessary to enable them to carry it on, their formation into a regulated company would seem to be the most judicious measure that could be adopted ; inasmuch as it would obtain for them that protection which is indispensable, without encroaching on the freedom of individual enterprise.
The African, the Levant, and some other branches of trade, were for a long time conducted by open or regulated companies. These, however, have been recently abolished: the African Company, by the act 1 & 2 Geo. 4. c. 28. ; and the Levant Company, by the act 6 Geo. 4. c. 33. The Russia Company still exists. — (See Russia Company.)
In so far as relates to protection, it may perhaps be thought, for the reasons given by Dr. Smith, that a joint stock company is better calculated to afford it than a regulated company. The directors of the latter baving, Dr. Smith alleges, no particular interest in the prosperity of the general trade of the company, for beboof of which, ships of war, factories, or forts have to be maintained, are apt to neglect them, and to apply their whole energies to the care of their own private concerns. But the interest of the directors of 2 joint stock company are, he contends, in a great measure identified with those of the association. They have no private capital employed in the trade; their profits must depend upon the prudent and profitable management of the common stock; and it may, therefore, it is argued, be fairly presumed that they will be more disposed to attend carefully to all the means by which the prosperity of the association may be best secured. On the other hand, however, it is seldom that the directors of joint stock companies stop at the proper point; having almost invariably attempted to extend their commercial dealings by force, and to become not only merchants but sovereigns. Nor is this any thing but
what might have been expected, seeing that the consideration and extensive patronage accruing from such measures to the directors is generally of far more importance to them than a moderate increase of the dividends on their stock. Whenever they have been able, they have seldom scrupled to employ arms to advance their projects; and instead of contenting themselves with shops and factories, have constructed fortifications, embodied armies, and engaged in war. But such has not been the case with regulated companies. The businesses under their control have uniformly been conducted in a comparatively frugal and parsimonious manner; their establishments have been, for the most part, confined to factories; and they have rarely, if ever, allowed themselves to be seduced by schemes of conquest and dominion.
And henee, considering them as commercial machines, it does not really seem that there can be any doubt as to the superiority of a regulated over a joint stock company. The latter has the defect, for which nothing almost can compensate, of entirely excluding individual enterprise and competition. When such a company enjoys any peculiar privilege, it naturally, in pursuing its own interest, endeavours to profit by it, bow injurious soever it may be to the public. If it have a monopoly of the trade with any particular country, or of any particular commodity, it rarely fails, by understocking the home and foreign markets, to sell the goods which it imports and exports at an artificially enhanced price. It is not its object to employ a comparatively large capital, but to make a large protit on a comparatively small capital. The conduct of the Dutch East India Company, in burning spices, that their price might not be lowered by larger importations, is an example of the mode in which such associations uniformly and, indeed, almost necessarily act. All individuals are desirous of obtaining the highest possible price for what they have to sell : and if they are protected by a monopoly, or an exclusive privilege, from the risk of being undersold by others, they never hesitate about raising the price of their products to the highest elevation that the competition of the buyers will allow them; and thus frequently realise the most exorbitant profits.
And yet, notwithstanding these advantages, such is the negligence, profusion, and peculation, inseparable from the management of great commercial companies, that even those that have had the monopoly of the most advantageous branches of commerce have rarely been able to keep out of debt. It will be shown in the article East India COMPANY, that that association has lost by its trade; and that, had it not been for the aid derived from the revenues of India, it must long since have ceased to exist. To buy in one market; to sell with profit in another ; to watch over the perpetually occurring variations in the prices, and in the supply and demand of commodities ; to suit with dexterity and judgment the quantity and quality of goods to the wants of each market; and to conduct each operation in the best and cheapest manner ; requires a degree of unremitting vigilance and attention, which it would be visionary to expect from the directors or servants of a great joint stock association, Hence it has happened, over and over again, that branches of commerce which proved ruinous to companies, have become exceedingly profitable when carried on by individuals.
5. Constitution of Companies. When application is made to parliament for an act to incorporate a number of individuals into a joint stock company for the prosecution of any useful undertaking, care should be taken not to concede to them any privileges that may be rendered injurious to the public. If a company be formed for the construction of a dock, a road, or a canal, it may be necessary, in order to stimulate individuals to engage in the undertaking, to give them some peculiar privileges for a certain number of years. But if other persons were to be permanently hindered from constructing new docks, or opening new lines of communication, a lasting injury might be done to the public. It may be highly expedient to incorporate a company for the purpose of bringing water into a city; but supposing there were no springs in the vicinity, other than those to which this company has acquired a right, they might, unless restrained by the açt incorporating them, raise the price of water to an exorbitant height; and make large profits for themselves at the expense and to the injury of the public. In all cases of this sort ; and in the case, indeed, of all joint stock companies established for the formation of canals, railroads, &c. ; it would be sound policy to limit the rates charged for their services, or on account of the water, ships, goods, &c. conveyed by their means, and also to limit the dividends, or to fix a maximum beyond which they should not be augmented : enacting, that if the rates charged by the company produce more than sufficient to pay the maximum rate of dividend, and to defray the wear and tear of the aqueduct, canal, &c., they shall be allowed to reduce them till they only yield this much; and, in the event of their declining to do so, that the whole surplus above paying the dividend shall be applied to purchase up the stock of the association, so that ultimately the charges on account of dividends may be entirely abolished. Had this principle been acted upon when canals first began to be formed in England, the carriage of goods conveyed by some of the most important lines of communication would now have cost almost nothing; and this desirable result might have been accomplished in the way now suggested, with
24,565,000 yards of cloth, and 1,795,760 lbs. of twist. And in 1840, we exported to Turkey, exclusive of the Morea and of Syria and Palestine, no fewer than 15,000,000 yards cotton cloth, and 3,272,805 lbs. twist and yarn, being an increase in the course of 15 years of nearly 400 per cent. in the exports of stuffs, and of more than 600 per cent. in those of twist and yarn. In consequence, most of the Turkish establishments for the manufacture of cottons, except a few which use English yarn, have been given up. But the great consumption of Turkey consists of home-made fabrics, and hitherto these have been but little interfered with. Most part of the stuffs we send out are what are called plain goods ; and if our coarser fabrics should once begin to supersede those made by the Turkish peasantry, it is not easy to say to what degree the demand for them might be extended.
Of the European states, Austria and Switzerland have been our most formidable rivals in the supply of Turkey with cottons. The stuffs were, in several respects, well fitted for the Eastern markets; but owing to the difficulty they lay under of getting returns, and the continued and rapid reduction in the price of English cottons, we seem to have gained a decided advantage over them, and are now nearly in the exclusive possession of the market. Cheapness is every where the grand desideratum. Though our muslins and chintzes be inferior in fineness to those of the East, and our red dye (a colour in great esteem in Turkey, Persia, &c.) be inferior in brilliancy, these defects are more than balanced by the greater cheapness of our goods ; and from Smyrna to Canton, from Madras to Samarcand, we are every where supplanting the native fabrics ; and laying the foundations of a commerce that will be eminently beneficial to all parties.
Our commerce with Turkey would be considerably facilitated by the farther reduce tion of the duties on figs, currants, and oil. Nothing, however, would contribute so much to its extension, as the establishment of order and tranquillity throughout the country. But this, we fear, is beyond the ability of the Ottoman government. The abuses which have reduced the empire to its present state of degradation seem to be inherent in the strueture of Turkish society, and to be in harmony with the habits and prejudices of the people. If such be the case, reform must come from without, and not from within. But of whatever other advantages a revolution might be productive, it is difficult to believe that it would bring along with it a more liberal system of commercial policy than that which at present exists. Account of the Quantities of the principal Articles of Foreign and Colonial Produce imported into the United Kingdom from Turkey, including Continental Greece, but excluding Syria and Palestine, in 1840 and 1841 ; and of the Quantities and Values of the principal Articles of British and Irish Produce exported to the same in 1839 and 1840.
cwts. 17,963 16,293 Coals, culm, and cinders tons 27,707 Midder root
66,529 54,9521 Cotton manufac. entd. by sd. • yds 45,167,755 Olive oil. gal. 21,936 43,358
twist and varn
. lbs. 2,340,616 Opium
lbs. 50,746 130,905! Earthenware of all sorts pieces 115.128 Harans - CWS 54,33,3 52,979 Iron & steel, wrought & unw. • tons
6,105 Flaxseed & lin
Linen manufac, entd. by yd.
• yds. 79,347 . bush 16,105!
287! Machinery and nuill-work $1, raw & waste lbs. 725,189 732,626, 118.4', plated ware, jewellery and Lambing
no. 163,351 117.759 watches Valupla - cwts. 143.045113,3201 Sugar, refined
- cwts. 10.585 Wooi, cotton lbs. 46.7,978 163,354 Woollen manufac. entd. by piece pes. 10,965 shepp's
655,964 447,563 | All other articles
CONSUL, in commerce, an officer appointed by competent authority to reside in foreign countries, in the view of facilitating and extending the commerce carried on between the subjects of the country which appoints him, and those of the country or place in which he is to reside.
Origin and Appointment of Consuls. · The office of consul appears to have originated in Italy, about the middle of the twelfth century. Soon after this, the French and other Christian nations trading to the Levant began to stipulate for liberty to appoint consuls to reside in the ports frequented by their ships, that they might watch over the interests of their subjects, and judge and determine such differences with respect to commercial affairs as arose amongst them. The practice was gradually extended to other countries ; and in the sixteenth century was generally established all over Europe. — (Martens, Précis du Droit des Gens, § 147.)
British consuls were formerly appointed by the Crown, upon the recommendation of great trading companies, or of the merchants engaged in the trade with a particular country or place; but they are now directly appointed by government, without requiring any such recommendation, though it, of course, is always attended to when made.
The right of sending consuls to reside in foreign countries depends either upons