The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) Read Online Free PDF

sensible to many rich Londoners precisely because such enterprises depended for their success upon collaboration between navigation and commercial skills. The company form could more easily create conditions for such collaboration. The one singular element of the English context, therefore, without which the Company’s origin cannot be understood, is the partnership between merchants-bankers and sailors-soldiers-navigators. Of course, merchants routinely hired sailors and soldiers in India too. But sailors persuading merchants to take unique patterns of commercial risk—precisely what led to the founding of the Company—would be a very unusual phenomenon in contemporary India. On the point of enabling an equal partnership between navigators and merchants, Western Europe in 1600 had become an exceptional corner of the world,even though the merchants hardly had any idea where that exceptionality might lead them.
    In addition, the adoption of joint-stock and limited liability gave the Company a specifically modern form.
Origins of the joint stock
    The origin of the joint-stock company is attributed variously to the medieval partnerships in England, German corporatism and a Genovese institution of raising a public loan to finance a company. The Genovese institution in turn derived from an Arabic root. The significance of these forms derived from the use made of them by the guild merchants of the towns and boroughs. The guilds were a part of the town administration, which regulated the right of its members to practice a trade. In principle, the guild needed a constitution to ensure that only the lawful members had access to the profits of trade. The legal aspect demanded some form of administrative charter or license, so that law-breakers could be punished by the state. In England, the Crown had the power by common law to grant charters of incorporation to associations of merchants. The chartered rights thus awarded followed a common template; and a common set of rights and duties applied to all of the overseas trading companies as well.
    In the sixteenth century, commercial bodies that had originated in the guilds were beginning to move out of the towns in their immediate vicinity to distant port cities for greater business opportunities. One of the earliest expressions of the guilds venturing out was the formation of the London firm, Company of Merchant Adventurers, in 1505 to counter growth of trade in the Flanders. In order to achieve this, such firms needed to empower the overseas chief with some law-enforcement privileges. From ‘regulated’ companies where the collectively held wealth was liable for losses, these trading companies gradually transformed themselves into joint-stock ventures with limited liability. The application of the limited liability principle enabled larger flows of savings into shareholding, as William Scott showed in a classic treatise on corporate law.
    The royal charters issued between 1580 and 1610 in response to applications from merchants seeking profits overseas inherited their constitution from the guilds. And not unlike the town guild, they were all charters to create monopolies. The overseas chartered company sought and received the privilege to exclude other countrymen from overseas trade in a specific area. But this monopoly was unlike any other. Unlike the towns, the oceans did not have a government of their own, and presented logistical difficulty of enforcing any monopoly.The overseas charter, therefore, was in practice contestable.
    In the specific case of the East India Company, the moral right to a monopoly came under constant attack. The Company managed to keep shareholding restricted, so that the monopoly profits accrued to a few. The conjunction of profit and privilege made groups within the Parliament contend that its charter was in breach of basic rights of freedom. Private traders or ‘interlopers’ from the early 1600s sought the backing of these lobbies. The sentiment did