Overview

These days we take for granted the fixed role of the Company in society. It’s almost seen as a sine qua non by many. However this was not always so and many of the first Chartered Companies either “decorporatised”, ie converted back to Guilds, or were abolished and as a business format it came very close to being abolished only decades after its creation. It is an interesting counterfactual as to how a parallel universe developed in which England deleted the Company in 1604 rather than continued to develop it from there for centuries (a legacy naturally imported into the thirteen colonies and the US).

Far away trading, as we have covered in prior blogs was “challenging”, as in many died en voyage or were kidnapped and enslaved. Not was the nature of business lethal at times but the very life of the Chartered Company per se was in severe jeopardy, all change creates winners and losers and the latter don’t always accept defeat and move on. Chartered Companies were very controversial (changes from Guilds to Companies created more losers than winners) and The Company came very close to being snuffed out at birth – a 1604 bill that had passed through the Commons in Parliament would have abolished them all and was only stopped in the Lords due to royal intervention.

This intermingling of business and the State which was present right from the start continues to be a major political/metapolitical issue to this day.

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Parliamentary Attacks On Trading Monopolies/Licence Micromanagement

As we have seen in our terms the nearest analogy to a charter over a trade route is being given a patent over a new discovery – namely a workable trade route from England to important far-away markets. This route monopoly – but not market monopoly, at one time the Muscovy, Levant and East India companies were all trading in the middle east – wasn’t always that enforceable far away from home. It is important not to bring a modern economic perspective to a very historic debate. Guilds had always been monopolies by definition and indeed they continue to be in cases such as the Law Society which is in essence a modern version of a Guild of Lawyers or BMC a Guild of Doctors along with other professions.

The Company however was more restrictive in its admittance of members than Guilds, and great friction was caused by its key aspect of being regionally based – which in the case of companies generally meant in London at the expense of the provinces and the”outports” which in those days were a long and often perilous journey away from the capital. The following quotes are all from the phenomenal 41 volumes of a “History of Parliament online”:

“As the greatest port in England, London handled a large share of the country’s overseas trade. Much of this commerce was in the hands of a small number of chartered trading companies, of which the most important at the beginning of James’s reign was the Merchant Adventurers, who dominated cloth exports to the Continent. Trade with the Indies was controlled by the newly formed East India Company, while the route to Russia was monopolized by the Muscovy Company. Of the major London trading companies, only the Eastland Company, which traded with the Baltic, did not enjoy a monopoly. London-based trading companies were in theory national ventures, open to anyone who had the money to invest in their stock, but in practice they were dominated by a small number of wealthy London merchants, who jealously guarded their monopoly rights at the expense of the outports. Their extensive trading privileges were a source of envy outside the capital, particularly during the final years of Elizabeth’s reign, when there was general hostility to all forms of monopoly.” [1]

The threat to recently formed trading companies was very real and on the 18th April 1604 a bill to grant free trade to all merchants was given a first reading in the Commons:

“The Venetian ambassador believed that this bill, which threatened to dissolve the London trading companies, was drawn up in response to a petition ‘signed by many merchants’. By 24 Apr. the bill had been joined by a second, and the two measures were entrusted to the same committee, which pursued only one of them. A period of intensive lobbying followed. Large numbers of merchants ‘from all parts of the realm’, but ‘especially’ from London, besieged the committee. The Trinity House of Deptford [2] sided with the Merchant Adventurers [3], whose dissolution, it claimed, would weaken the kingdom’s naval power and diminish the standing of English merchants abroad, as trade would henceforward be carried on by ‘peddlers and not with merchants’. However, the committee was not susceptible to these arguments, being dominated by the outports, whose representatives had been granted membership of the committee en bloc. On 21 May it announced, through its spokesman Sir Edwin Sandys, that London’s joint stock companies ‘cannot be otherwise counted than a monopoly’. A mere 200 Merchant Adventurers enjoyed ‘the managing of the two thirds parts of the clothing of this realm’, and yet the trade might ‘well maintain many thousand merchants more’. The Muscovy Company, whose recent whaling expeditions to Spitzbergen aroused the hostility of the outports, particularly Hull and King’s Lynn, was even more objectionable as it was ‘a monopoly in a monopoly’, for though there were 160 investors it was controlled by just 15 directors. The Muscovy merchants did not deny this accusation, but argued that ‘the state of the country [Russia] cannot bear any other kind of managing of the trade’. The Commons concurred with the committee, however, and the first of the free trade bills was permitted to continue. London’s Members subsequently did their best to hinder its progress.” [1]

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The Fate Of Chartered Companies Hangs By A Thread

The bill passed through the Commons and five days later made its way to the Lords and it was only the intermingling of the business of business with the business of State (’twas ever thus) that stopped the “free trade” bill and saved The Company per se from an early death.

“…the bill was sent up to the Lords, where it encountered considerable hostility. However, the bill’s fate was probably sealed when it was learned that James had urged the Muscovy Company to dispatch an embassy to Russia, which the Company had delayed sending for fear that it was about to be dissolved. James needed the Muscovy Company to continue in order to maintain diplomatic relations with Russia, and his intervention gave a clear signal that the free trade bill would never receive the Royal Assent.” [1]

However if The Chartered Company per se had been saved that wasn’t a blanket save by any means – parliament and practicalities being the two main challenges.

In parliament specific attacks continued with the Spanish Company becoming particularly entangled in parliament’s sempiternal machinations (this would be the chief headache for the EIC). It had been chartered in 1530 for trade with Spain and Portugal which hadn’t been that easy given the mostly hostile relations between England and the Iberians over the period:

“The failure of the free trade bill did not deter the opponents of London’s trading companies from mounting fresh attacks. When Parliament reassembled in November 1605, the attentions of the free-traders focused on the Spanish Company, which had been recently revived after a long period of inactivity caused by the Elizabethan war with Spain. The company was aware of its vulnerability, and in order to avoid parliamentary opposition it had obtained a fresh charter in June 1605 that widened its membership. As a result, almost half the governing assistants were drawn from the outports [non-London ports]. However, the free-traders in the Commons ignored the new charter, and on the first day of the second session Sir George Somers, sitting for Lyme Regis, complained of ‘inconveniences’ arising from the revived company. Consequently a committee was appointed which drafted a bill throwing open the Spanish trade to all-comers. Faced with this assault, and without the assistance of the king, who did not need it for his diplomacy, the Company began to melt away. Its meetings ceased and the Bristol members seceded, leaving those who remained to argue that free trade would ‘discourage the expert and skilful merchant from trading’ and cause confusion that would ‘utterly overthrow the whole trade’. By the time the bill was enacted in June 1606 the Spanish Company was already defunct.” [1]

Further parliamentary attacks by free-traders on trading monopolies continued:

“The overthrow of the Spanish Company was not quite the final act in the free trade dramas of 1604-6, as it put fresh heart into the opponents of the London trading companies. On 17 Mar. 1606, five days after the bill condemning the Spanish Company was sent up to the Lords, a measure to throw open the Muscovy trade received a second reading and was committed few weeks later, on 3 Apr., a bill ‘for the liberty of free trade into all countries’, received a second reading and was committed. Although neither bill progressed any further, the renewed attacks of the free trade lobby were bolstered by separate legislative assaults on the Eastland Company and Merchant Adventurers.” [1]

It is important to note that this was not just an attack on The Company per se, even if Companies did tend to limit membership far more than Guilds, but a wider attack on monopolies/licences in general which were at the heart of all trading Guilds. Thus there were several squabbles for example the Clothworkers who had a monopoly on dressing cloth were long-time enemies of the Merchant Adventurers who wanted to export cloth in finished condition and ignored a 1566 bill protecting the Clothworkers interests. The Clothworkers tried again and in 1606 got a bill as far as the Lords before it failed. Another battle that went through parliament was on behalf of the Skinners against the Eastland Company (who traded with Scandinavia and the Baltic). This is a great example of the micromanagement of effectively business licences with in the end parliament enacting a law that the Eastland Company must buy their furs from the skinners, and – to my point re micromanagement – only to export black rabbit skins that they had dressed.

“The acts to relieve the artisan skinners and dissolve the Spanish Company dealt a significant blow to the London joint stock companies.” [1]

The struggles continued with detailed State involvement time and time again:

“By 1614, however, there was renewed interest in London’s trading companies. A quarrel between the Muscovy Company and Hull over whaling off Greenland saw the establishment of a Commons’ committee of inquiry, and when the House learned of plans to replace the Merchant Adventurers with a rival consortium of London merchants led by Alderman Cockayne it responded by summoning representatives of both groups.76 The Commons’ main interest, however, focused on the newly incorporated French Company, which enjoyed a monopoly of the export trade to France in defiance of the 1606 Free Trade Act, which had dissolved not only the Spanish Company but opened up trade to France to all-comers.

Like the ill-fated Spanish Company, the French Company was not entirely composed of London merchants but it was clearly dominated by them. Many Members of the Commons, particularly those from Devon and Bristol, saw the establishment of the Company as yet another sign that greedy London merchants were trying to monopolize trade at the expense of the rest of the country, and they reacted accordingly…

The 1614 Parliament was dissolved before the matter could be resolved to the Commons’ satisfaction. By the time Parliament reassembled in 1621, attitudes towards the London trading companies had hardened owing to the trade depression and the general unpopularity of monopolies. Indeed, so numerous were the complaints that one historian has rightly observed that ‘the Parliament of 1621 represents the high point of the hostility of the Commons to the national chartered companies’.82 The Merchant Adventurers, blamed for the cloth depression, were subjected to a series of attacks, including a bill to undermine their monopoly by restoring the free trade of the Merchants of the Staple, which received two readings. Feelings ran so high that, when the Cinque Ports petitioned against them, Sir Edward Coke remarked that there was ‘no greater cause in all this Parliament’.” [1]

Controversy and frictions between an ever-more London centric trading preferences rumbled on until the late 1620s led to some unity between London and the outports all of whose shipping had been disrupted by war with Spain and alleged lack of support from the Navy. Fasts forwarding a century or so and Adam Smith is now well-known for taking up the charge against monopolies.

Outside parliament trading companies had other challenges. The Levant Company continued to have difficulties with interlopers, non-Company freelancers trading despite having no licence, pirates, as well as their own factors (overseas trading staff in the factories):

“Interlopers were comparatively easy to deal with; the pirates were more of a difficulty. The Levant Company was asked to subscribe to the fitting out of a fleet for the defence of commerce. This did not suit it. It preferred to run the chance either of escape or successful resistance. Even worse than the pirates were the factors. Business had to go through their hands. And they contrived, regulations notwithstanding, to make considerable profits for themselves.” [4]

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The Price To Pay For Saving The Company

What the 1908 Spectator failed to mention was that perhaps yet more challenging for the Chartered Company were the State’s requests, the tit for tat. One of the, at a minimum, painful and at worst fatal, flaws of chartered companies as independent entities from the perspective of the company was charter renewal. As you might imagine the State (in this context the privy council) used to twist the arm as far as it would go – or further. Negotiations were often prolonged and tricky. The monopoly that the Levant Company had received was suspended twice, a rival company was allowed to form, and eventually the Levant Company, like the Muscovy Company before it decided that the format of a chartered company wasn’t worth the hassle and downshifted to a Regulated Company/Guild. It traded in this format for some two centuries until, like the EIC in the late 18thC, it was taken over by the State:

“Finally, though, the expanding power of the state was the decisive factor in the demise of the company. All of the company’s consular establishments taken over by the British Board of Trade in 1825, and special court surrendered the charter. An act of Parliament repealed all statutes relating to the Levant Company, and all its possessions and liabilities were transferred to the government.” [5]

In a recent article examining this conundrum for the Levant Company and the State – “Royal authority versus corporate sovereignty: the Levant Company and the ambiguities of early Stuart statecraft” – White summarises:

“The article will show that mercantilism was, in the words of Phil Stern, an “awkward alliance” where merchant and state required one another while remaining suspicious of the other’s motives and authority.” [6]

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Business Buys The State

Big Business has always sought to reduce it’s business risk (random changes of direction/taxes from politicians) by controlling the political process.

One is once again reminded of Old Assyria where the merchants were kept at arms length from the rulers lest they overly influence them. Interestingly this still obtains – in the UK the City is in one place and Westminster and in the US FS is in New York and the government in Washington. Maybe arms have got longer as these days “arms length” doesn’t seem to cut it any more to prevent certain groups of merchants hijacking the State Governance process for their benefit – money and power always being close bedfellows in human societies.

The first notable “arm-lengthening” or perhaps reverse takeover-ing was with the East India Company. Chartered in 1600 amidst all the Guild vs Company controversy they learned the requisite lesson – in the case of MegaCos political connections are everything. In the 17th/18thC the East India parliamentary lobby was a force to be reckoned with (until it wasn’t and the State basically absorbed the EIC Pistols at Dawn qv).

Leaping forward centuries America has always prided itself on business efficiency and took this one giant leap for corporate-kind further forwards with the invention of a phenomenally efficient pay per policy model that is the vast and effective Washington lobbying industry today. And that’s before we move on to nuances such as the revolving door between regulators and the companies they regulate – most notably in 2021 with the CDC and BigPharma.

Barring something rather extraordinary – Nazi Germany’s control of Companies springs to mind as a rare counter-example (the USSRs abolition of companies is cheating lol) – this uneasy balance between commercial and political power seems to have swung permanently in the merchants direction, Big Tech having solved that problem by, it is assumed, keeping a folder of all congresssmen’s dick pics shared over their platforms.

Or if they don’t have the pics the deep/permanent State does – but then we are in the realms of political theory. The Qing dynasty for example being brought down when Emperors became ever weaker and power ebbed away to the permanent state (eunuchs and concubines (compare and contrast to the 21stC state anyone?)) became ever more powerful. Internally. However without the early Qing emperors ability to successfully fight off military incursions into the empire. which eventually ended the State that the permanents had captured.

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Footnotes

[1] The History of Parliament Online https://www.historyofparliamentonline.org/volume/1604-1629/constituencies/london Section III. Free Trade and Parliament

[2] Trinity House was first chartered in 1514 by Henry VIII to improve and regulate navigation on the Thames. Company names weren’t short, it’s first charter entitling it “The Master, Wardens, and Assistants of the Guild, Fraternity, or Brotherhood of the most glorious and undivided Trinity, and of St. Clement in the Parish of Deptford-Strond in the County of Kent”. Amazingly it still exists to this day.

[3] The Company of Merchant Adventurers of London was a regulated trading company (ie a Guild) in the early 15th century (if not earlier). It brought together leading merchants who traded with the near-continent.

[4] The Spectator “Review of The Early History of the Levant Company. By M. Epstein” July 25th 1908

[5] A. de Groot “Levant Company.” Encyclopedia.com

[6] J. White “Royal authority versus corporate sovereignty: the Levant Company and the ambiguities of early Stuart statecraft” 2017