fall even a good deal short of that rate.
Without a monopoly, however, a joint-stock
company, it would appear from experience,
cannot long carry on any branch of foreign
trade. To buy in one market, in order to
sell with profit in another, when there are
many competitors in both; to watch over,
not only the occasional variations in the demand,
but the much greater and more frequent
variations in the competition, or in the
supply which that demand is likely to get
from other people; and to suit with dexterity
and judgment both the quantity and quality
of each assortment of goods to all these
circumstances, is a species of warfare, of which
the operations are continually changing, and
which can scarce ever be conducted successfully,
without such an unremitting exertion
of vigilance and attention as cannot long be
expected from the directors of a joint-stock
company. The East India company, upon
the redemption of their funds, and the expiration
of their exclusive privilege, have a
right, by act of parliament, to continue a
corporation with a joint stock, and to trade in
their corporate capacity to the East Indies,
in common with the rest of their fellow subjects.
But in this situation, the superior vigilance
and attention of a private adventurer
would, in all probability, soon make them
weary of the trade.
An eminent French author, of great knowledge
in matters of political economy, the
Abbé Morellet, gives a list of fifty-five joint-stock
companies for foreign trade, which have
been established in different parts of Europe
since the year 1600, and which, according
to him, have all failed from mismanagement,
notwithstanding they had exclusive privileges.
He has been misinformed with regard to the
history of two or three of them, which were
not joint-stock companies and have not failed.
But, in compensation, there have been
several joint-stock companies which have failed,
and which he has omitted.
The only trades which it seems possible for
a joint-stock company to carry on successfully,
without an exclusive privilege, are those,
of which all the operations are capable of
bring reduced to what is called a routine, or
to such a uniformity of method as admits
of little or no variation. Of this kind is,
first, the banking trade; secondly, the trade
of insurance from fire and from sea risk, and
capture in time of war; thirdly, the trade of
making and maintaining a navigable cut or
canal; and, fourthly, the similar trade of
bringing water for the supply of a great city.
Though the principles of the banking trade
may appear somewhat abstruse, the practice
is capable of being reduced to strict rules.
To depart upon any occasion from those
rules, in consequence of some flattering speculation
of extraordinary gain, is almost always
extremely dangerous and frequently
fatal to the banking company which attempts
it. But the constitution of joint-stock companies
renders them in general, more tenacious
of established rules than any private
copartnery. Such companies, therefore, seem
extremely well fitted for this trade. The
principal banking companies in Europe, accordingly,
are joint-stock companies, many
of which manage their trade very successfully
without any exclusive privilege. The bank
of England has no other exclusive privilege,
except that no other banking company in
England shall consist of more than six persons.
The two banks of Edinburgh are
joint-stock companies, without any exclusive
privilege.
The value of the risk, either from fire, or
from loss by sea, or by capture, though it
cannot, perhaps, be calculated very exactly, admits,
however, of such a gross estimation, as
renders it, in some degree, reducible to strict
rule and method. The trade of insurance,
therefore, may be carried on successfully by a
joint-stock company, without any exclusive
privilege. Neither the London Assurance,
nor the Royal Exchange Assurance companies,
have any such privilege.
When a navigable cut or canal has been
once made, the management of it becomes
quite simple and easy, and it is reducible to
strict rule and method. Even the making of
it is so, as it may be contracted for with undertakers,
at so much a mile, and so much a
lock. The same thing may be said of a canal,
an aqueduct, or a great pipe for bringing
water to supply a great city. Such undertakings,
therefore, may be, and accordingly
frequently are, very successfully managed by
joint-stock companies, without any exclusive
privilege.
To establish a joint-stock company, however,
for any undertaking, merely because
such a company might be capable of managing
it successfully; or, to exempt a particular
set of dealers from some of the general
laws which take place with regard to all their
neighbours, merely because they might be
capable of thriving, if they had such an
exemption, would certainly not be reasonable.
To render such an establishment perfectly
reasonable, with the circumstance of being
reducible to strict rule and method, two other
circumstances ought to concur. First, it
ought to appear with the clearest evidence,
that the undertaking is of greater and more
general utility than the greater part of common
trades; and, secondly, that it requires a
greater capital than can easily be collected
into a private copartnery. If a moderate
capital were sufficient, the great utility of the
undertaking would not be a sufficient reason
for establishing a joint-stock company; because,
in this case, the demand for what it
was to produce, would readily and easily be
supplied by private adventurers. In the four