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CHARTERED COMPANIES

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Originally appearing in Volume V05, Page 952 of the 1911 Encyclopedia Britannica.
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CHARTERED COMPANIES . A chartered See also:

company is a trading See also:corporation enjoying certain rights and privileges, and See also:bound by certain obligations under a See also:special See also:charter granted to it by the See also:sovereign authority of the See also:state, such charter defining and limiting those rights, privileges and obligations, and the localities in which they are to be exercised. Such companies existed in See also:early times, but have undergone changes and modifications in accordance with the developments which have taken See also:place in the economic See also:history of the states where they have existed. In See also:Great See also:Britain the first trading charters were granted, not to See also:English companies, which were then non-existent, but to branches of the Hanseatic See also:League (q.v.), and it was not till 1597 that See also:England was finally relieved from the presence of a See also:foreign chartered company. In that See also:year See also:Queen See also:Elizabeth closed the See also:steel-yard where Teutons had been established for 700 years. The origin of all English trading companies is to be sought in the Merchants of the See also:Staple. They lingered on into the 18th See also:century, but only as a name, for their business was solely to export English products which, as English manufactures See also:grew, were wanted at See also:home. Of all early English chartered companies, the " See also:Merchant Adventurers " conducted its operations the most widely. Itself a development of very early trading See also:gilds, at the height of its prosperity it employed as many as 50,000 persons in the See also:Netherlands, and the enormous See also:influence it was able to exercise undoubtedly saved See also:Antwerp from the institution of the See also:Inquisition within its walls in the See also:time of See also:Charles V. In the reign of Elizabeth See also:British See also:trade with the Netherlands reached in one year 12,000,000 ducats, and in that of See also:James I. the company's yearly See also:commerce with See also:Germany and the Netherlands was as much as I,000,000. See also:Hamburg afterwards was its See also:principal See also:depot, and it became known as the " Hamburg Company." In the " Merchant Adventurers' " enterprises is to be seen the germ of the trading companies which had so remarkable a development in the 16th and 17th centuries. These old regulated trade gilds passed gradually into See also:joint-stock associations, which were capable of far greater See also:extension, both as to the number of members and amount of stock, each member being only accountable for the amount of his own stock, and being able to See also:transfer it at will to any other See also:person.

It was in the See also:

age of Elizabeth and the early Stuarts that the chartered company, in the See also:modern sense of the See also:term, had its rise. The See also:discovery of the New See also:World, and the opening out of fresh trading routes to the Indies, gave an extraordinary impulse to See also:shipping, commerce and See also:industrial enterprise through-out western See also:Europe. The English, See also:French and Dutch governments were ready to assist trade by the granting of charters to trading associations. It is to the " See also:Russia Company," which received its first charter in 1554, that Great Britain owed its first intercourse with an See also:empire then almost unknown. The first recorded instance of a purely chartered company annexing territory is to be found in the See also:action of this company in setting up a See also:cross at Spitzbergen in 1613 with See also:King James's arms upon it. Among other associations trading to the See also:continent of Europe, receiving charters at this time, were the See also:Turkey Company (See also:Levant Co.) and the Eastland Company. Both the Russia and Turkey Companies had an important effect upon British relations with those empires. They maintained British influence in those countries, and even paid the expenses of the embassies which were sent out by the English See also:government to their courts. The Russia Company carried on a large trade with See also:Persia through See also:Russian territory; but from various causes their business gradually declined, though the Turkey Company existed in name until 1825. The chartered companies which were formed during this See also:period for trade with the Indies and the New World have had a more wide-reaching influence in history. The extraordinary career of the See also:East See also:India Company (q.v.) is dealt with elsewhere. Charters were given to companies trading to See also:Guinea, See also:Morocco, See also:Guiana and the Canaries, but none of these enjoyed a very See also:long or prosperous existence, principally owing to the difficulties, caused by foreign competition.

It is when we turn to See also:

North See also:America that the importance of the chartered company, as a colonizing rather than a trading agency, is seen in its full development. The " See also:Hudson's See also:Bay Company," which still exists as a commercial concern, is dealt with under its own heading, but most of the thirteen British North See also:American colonies were in their inception chartered companies very much in the modern acceptation of the term. The history of these companies will be found under the heading of the different colonies of which they were the origin. It is necessary, however, to See also:bear in mind that two classes of charters are to be found in force among the early American colonies: (1) Those granted to trading associations, which were often useful when the See also:colony was first founded, but which formed a serious obstacle to its progress when the See also:country had become settled and was looking forward to commercial expansion; the existence of these charters then often led to serious conflicts between the grantees of the charter and the colonies; ultimately elective assemblies everywhere superseded See also:control of trading companies. (2) The second class of charters were those granted to the settlers themselves, to protect them against the oppressions of the See also:crown and the provincial See also:governors. These were highly prized by the colonists. In See also:France and See also:Holland, no less than in England, the institution of chartered companies became a settled principle of the governments of those countries during the whole of the period in question. In France from 1599 to 1789, more than 70 of such companies came into existence, but after 1770, when the great Compagnie See also:des Indes orientates went into See also:liquidation, they were almost abandoned, and finally perished in the See also:general sweeping away of privileges which followed on the outbreak of the Revolution. If we inquire into the economic ideas which induced the granting of charters to these earlier companies and animated their promoters, we shall find that they were entirely consistent with the general principles of government at the time and what were then held to be See also:sound commercial views. Under the old regime everything was a See also:matter of See also:monopoly and See also:privilege, and to this state of things the constitution of the old companies corresponded, the sovereign rights accorded to them being also quite in accordance with the views of the time. It would have been thought impossible then that private individuals could have found the funds or maintained the magnitude of such enterprises. It was only this See also:necessity which induced statesmen like See also:Colbert to countenance them, and See also:Montesquieu took the same view (Esprit des lois, t. xx. c.

1o). See also:

John de Witt's view was that such companies were not useful for colonization properly so called, because they want See also:quick returns to pay their dividends. So, even in France and Holland, See also:opinion was by no means settled as to their utility. In England historic protests were made against such monopolies, but the chartered companies were less exclusive in England than in either France or Holland, the governors of provinces almost always allowing strangers to trade on receiving some pecuniary inducement. French See also:corn- COMPANIES 951 mercial companies were more privileged; exclusive and artificial than those in Holland and England. Those of Holland may be said to have been See also:national enterprises. French companies rested more than did their rivals on false principles; they were more fettered by the royal See also:power, and had less initiative of their own, and therefore had less See also:chance of surviving. As an example of the See also:kind of rules which prevented the growth of the French companies, it may be pointed out that no Protestants were allowed to take See also:part in them. State subventions, rather than commerce or colonization, were often their See also:object; but that has been a characteristic of French colonial enterprise at all times. Such companies, however, under the old commercial See also:system could hardly have come into existence without exclusive privileges. Their existence might have been prolonged had the whole See also:people in time been allowed the chance of participating in them. To sum up the causes of failure of the old chartered companies, they are to be attributed to (I) See also:bad See also:administration; (2) want of See also:capital and See also:credit; (3) bad economic organization; (4) See also:distribution of dividends made prematurely or fictitiously.

But those survived the longest which extended the most widely their privileges to outsiders. According to contemporary See also:

pro-tests, they had a most injurious effect on the commerce of the countries where they had their rise. They were monopolies, and therefore, of course, See also:obnoxious; and it is undoubted that the colonies they founded only became prosperous when they had escaped from their yoke. On the other See also:hand, it must not be forgotten that they contributed in no small degree to the commercial progress of their own states. They gave colonies to the See also:mother country, and an impulse to the development of its See also:fleet. In the See also:case of England and Holland, the enterprise of the companies saved them from suffering from the monopolies of See also:Spain and See also:Portugal, and the See also:wars of the English, and those of the Dutch in the Indies with Spain and Portugal, were paid for by the companies: They furnished the mother country with luxuries which, by the 18th century, had become necessaries. They offered a career for the younger sons of See also:good families, and sometimes greatly assisted large and useful enterprises. During the last twenty years of the 19th century there was a great revival of the system of chartered companies in Great Britain. It is a feature of the general growth of See also:interest in colonial expansion and commercial development which has made itself See also:felt almost universally among See also:European nations. Great Britain, however, alone has succeeded in establishing such companies as have materially contributed to the growth of her empire. These companies succeed or fail for reasons different from those which affected the chartered companies of former days, though there are points in See also:common. Apart from causes inherent in the particular case of each company, which necessitates their being examined separately, See also:recent experience leads us to See also:lay down certain general principles regarding them.

The modern companies are not like those of the 16th and 17th centuries. They are not privileged in the sense that those companies were. They are not monopolists; they have only a limited See also:

sovereignty, always being subject to the control of the home government. It is true that they have certain advantages given them, for without these advantages no capital would See also:risk itself in the lands where they carry on their operations. They often have very heavy corresponding obligations, as will be seen in the case of one (the East See also:Africa) where the obligations were too onerous for the company to See also:discharge, though they were inseparable from its position. The charters of modern companies differ in two points strongly from those of the old: they contain clauses prohibiting any monopoly of trade, and they generally confer some special See also:political rights directly under the control of the secretary of state. The political freedom of the old companies was much greater. In these charters state control has been made a distinguishing feature. It is to be exercised in almost all directions in which the companies may come into contact with matters political. Of course, it is inevitable in all disputes of the companies with foreign See also:powers, and is extended over all decrees of the company regarding the administration of its territories, the See also:taxation of natives, and See also:mining regulations. In all cases of dispute between the companies and the natives the secretary of state is ex officio the See also:judge, and to the secretary of state (in the case of the See also:South Africa Company) the accounts of administration have to be submitted for his approbation. It is deserving of See also:notice that the British See also:character of the company is insisted upon in each case in the charter which calls it into See also:life.

The crown always retains See also:

complete control over the company by reserving to itself the power of revoking the charter in case of the neglect of its stipulations. Special clauses were inserted in the charters of the British East Africa and South Africa Companies enabling the government to forfeit their charters if they did not promote the See also:objects alleged as reasons for demanding a charter. This bound them still more strongly; and in the case of the South Africa Company the duration of the charter was fixed at twenty-five years. The chartered company of these days is therefore very strongly fixed within limits imposed by See also:law on its political action. As a whole, however, very remarkable results have been achieved. This may be attributed in no small degree to the See also:personality of the men who have had the supreme direction at home and abroad, and who have, by their social position and See also:personal qualities, acquired the confidence of the public. With the exception of the Royal See also:Niger Company, it would be incorrect to say that they have been financially successful, but in the domain of government generally it may be said that they have added vast territories to the British empire (in Africa about 1,700,000 sq. m.), and in these territories they have acted as a civilizing force. They have made roads, opened facilities for trade, enforced See also:peace, and laid at all events the See also:foundation of settled administration. It is not too much to say that they have often acted unselfishly for the benefit of the mother country and even humanity. We may instance the See also:anti-See also:slavery and anti-See also:alcohol See also:campaigns which have been carried on, the latter certainly being against the immediate pecuniary interests of the companies themselves, It must, of course, be recognized that to a certain extent this has been done under the influence of the home government. The occupation of See also:Uganda certainly, and of the Nigerian territory and See also:Rhodesia probably, will prove to have been rather for the benefit of posterity than of the companies which effected it. In the two cases where the companies have been bought out by the state, they have .had no See also:compensation for much that they have expended.

In fact, it would have been impossible to take into See also:

account actual See also:expenditure See also:day by day, and the cost of wars. To use the expression of See also:Sir See also:William Mackinnon, the shareholders have been compelled in some cases to " take out their dividends in philanthropy," The existence of such companies to-day is justified in certain political and economic conditions only. It may be highly desirable for the government to occupy certain territories, but political exigencies at home will not permit it to incur the expenditure, or See also:international relations may make such an undertaking inexpedient at the time. In such a case the formation of a chartered company may be the best way out of the difficulty. But it has been demonstrated again and again that, directly. the company's interests begin to clash with those of foreign powers, the home government must assume a See also:protectorate over its territories in See also:order to simplify the situation and See also:save perhaps disastrous collisions. So long as the political relations of such a company are with savages or semi-savages, it may be See also:left See also:free to See also:act, but directly it becomes involved with a civilized power the state has (if it wishes to retain the territory) to acquire by See also:purchase the political rights of the company, and it is obviously much easier to induce a popular See also:assembly to See also:grant See also:money for the purpose of maintaining rights already existing than to acquire new ones. With the strict system of government supervision enforced by modern charters it is not easy for the state to be involved against its will in foreign complications. Economically such companies are also justifiable up to a certain point. When there is no other means of entering into commercial relations with remote and See also:savage races save by enterprise of such magnitude that privateindividuals could not incur the risk involved, then a company may be well entrusted with special privileges for the purpose, as an inventor is accorded a certain See also:protection by law by means of a patent which enables him to bring out his invention at a profit if there is anything in it. But such privileges should not be continued longer than is necessary for the purpose of reasonably recompensing the adventurers. A successful company, even when it has lost monopoly or privileges, has, by its command of capital and general resources, established so strong a position that private individuals or new companies can rarely compete with it successfully. That this is so is clearly shown in the case of the Hudson's Bay Company as at See also:present constituted.

In colonizing new lands these companies often act successfully. They have proved more potent than the See also:

direct action of governments. This may be seen in Africa, where France and England have of See also:late acquired vast areas, but have See also:developed them with very different results, acting from the opposite principles of private and state promotion of colonization. Apart from national characteristics, the individual has far more to gain under the British system of private enterprise. A strong point in favour of some of the British companies has been that their undertakings have been practically extensions of existing British colonies rather than entirely isolated ventures. But a chartered company can never be anything but a transition See also:stage of colonization; sooner or later the state must take the See also:lead. A company may act beneficially so long as a country-is undeveloped, but as soon as it becomes even semi-civilized its conflicts with private interests become so frequent and serious that its authority has to make way for that of the central government. The companies which have been formed in France during recent years do not yet afford material for profitable study, for they have been subject to so much vexatious interference from home owing to lack of a fixed system of control sanctioned by government, that they have not been able, like the British, to develop along their own lines. , See also See also:BORNEO; See also:NIGERIA; BRIT. EAST AFRICA; RHODESIA; &C. The following See also:works See also:deal with the subject of chartered companies generally: Bonnassieux, See also:Les Grandes Compagnies de commerce (See also:Paris, 1892); Chailly-See also:Bert, Les Compagnies de colonisation sous l'ancien regime (Paris, 1898) ; Cawston and See also:Keane, The Early Chartered Companies (See also:London, 1896) ; W. See also:Cunningham, A History of British See also:Industry and Commerce (See also:Cambridge, 1890, 1892) ; See also:Egerton, A See also:Short History of British Colonial Policy (London, 1897) ; J.

See also:

Scott Keltie, The See also:Partition of Africa (London, 1895) ; Leroy-See also:Beaulieu, De la colonisation chez les peuples modernes (Paris, 1898) ; Les Nouvelles Societes anglo-saxonnes (Paris, 1897) ; See also:MacDonald, Select Charters illustrative of American History, 1606–1775 (New See also:York, 1899) ; B. P. See also:Poore,, Federal and State Constitutions, &c (See also:Washington, 1877; a more complete collection of American colonial charters) ; H. L. Osgood, American Colonies in the 17th Cent. (1904-7) ; Carton de Wiart, Les Grandes Compagnies coloniales anglaises an Iq^ ° siecle (Paris, 1899). Also see articles " Compagnies de Charte," " Colonies," " Privilege," in Nouveau Dictionnaire d'economie politique (Paris, 1892) ; and See also:article " Companies, Chartered," in See also:Encyclopaedia of the See also:Laws of England, edited by A. See also:Wood See also:Renton (London, 1907-1909). (W. B.

End of Article: CHARTERED COMPANIES

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