The Greed Creed: 17th and 18th Century Companies

It is the concept of ‘joint-stock company' that causes the wealth of nations to rise or fall. Or that is what most modern economists believe.

Perhaps, some 17th and 18th century companies can give us insights into how this 'company' has changed.

Let us look at the operations of three famous companies: The British East India Company chartered in 1600, in Britain, the Vereeningde Oostindische Compagnie (VOC) or the Dutch East Indies Company chartered in 1602, in Holland, and the Mississippi Company chartered in France, in 1717.

But before that, first, let us look at a fourth company, the Dutch West India Company (WIC), which gives us some stimulating facts to start us off, on our discussion.

WIC, chartered in 1623 in Holland, convinced its private investors to put money into a desolate island on Hudson River, saying it was fast becoming a trading hub for European countries.

Thanks to one Christopher Columbus, who discovered a sea connection some 120 years earlier, hundreds of ships were - by now - crisscrossing the Atlantic, plying their trade.

The Dutch called the region they developed as ‘New Amsterdam’. But they had to keep fighting the Red Indians, and even the British, to hold on to it.

The British eventually captured it in 1664, and renamed it, ‘New York’. And, on the remains of a wall - which the Dutch had built to fight the British and the Indians – is paved the ‘Wall Street’ on the island of Manhattan.

Today, this street, with most of USA’s chief financial institutions located here, including the NYSE, is often called 'the bastion of financial manipulators able to destabilize national economies'!

Holland/Dutch Purchase. 'The Purchase of Manhattan Island', Painting by Alfred Fredericks, c. 1910.
(Courtesy: Encyclopedia Britannica).

Now, let us go back to the beginning, to learn about the three companies I mentioned.

The East India Company established in 1600, by a Royal Charter by Queen Elizabeth I, was a private enterprise of some 200 odd British investors. The charter she issued created the first official joint-stock corporation or limited liability company.

These investors/share-holders wanted to gain from the East Indian spice trade, which was a monopoly of Spain-Portugal combine, until the defeat of the Spanish Armada in 1588.

By getting trade concessions from India's Moghul Empire, East India Company quickly grew to amazing proportions - trading in cotton, silk, indigo, saltpetre, spices and many other goods from India and Indo-China.

Believe it or not, at one point in time, this company controlled almost "half of the world's trade" and was called 'The World's Most Powerful Corporation' of that time.

When its excesses and exploitation increased, it faced stiff resistance from the Indians; Especially, after 1757, when the company made itself into a military power and took over Bengal region in the Battle of Plassey.

In the next 100 years, Indian struggle grew. And, with the 1857 Sepoy Mutiny (or the first war of Indian Independence, as per the Indian perspective), everything changed.

UK Parliament passed the Government of India Act 1858 liquidating the British East India Company and transferring its functions to the British Crown.

Head Quarters: The East India House in Leadenhall Street, London, drawing by Thomas Hosmer Shepherd, c. 1817 (Courtesy: Encyclopedia Britannica) 

The VOC or the ‘Dutch East India Company’ too wielded tremendous power. From Amsterdam, it controlled trade in Mauritius, South Africa, India, Japan, Malaysia, Thailand, and Vietnam.

Indonesian archipelago, in particular, was under VOC’s direct control for over 200 years, as they traded in agricultural produce and other goods.

This mega-corporation too became a military power and oppressed the natives, until the Dutch government revoked the charter and, in 1799, took over the company.

‘The Mississippi Company’ formed in the USA by French private investors in 1717 was a bit different. Its operations ensured the colonisation of Mississippi and birthed the city of New Orleans.

The exaggerated tales of fortune, which investors heard, made the company’s stock price to hit the ceiling.

This was the world's first case of stock prices going higher and higher due to rumours of corporation's success. By the time the investors in France realized, that their speculation of financial growth in faraway United States is not realistic, it was too late.

So, when the stock market came crashing down, it wiped out the fortunes of many and drove many to suicide.

In fact, the bursting of the Mississippi Bubble is one of the main causes of the 1789 French Revolution.

The companies of the 17th and 18th centuries made themselves into military powers, encouraged slave trade, exploited natives and exaggerated fortunes.

But, today, in this 21st century, these activities by joint stock companies are not only against 'Business Ethics' and 'Human Rights', but also simply unthinkable.