Introduction
Even today the term Chartered Company is usually applied with reference to the great chartered that existed from the sixteenth to eighteenth century including the likes of English, French and Dutch East Asia companies. These establishments were formed for other purposes other than trade and continued flourishing beyond the eighteenth, nineteenth and twentieth centuries.
Evidence of this can be seen by turning to a recent stock exchange yearbook where a list of British Chartered companies will be identified. According to statistics provided by Oriental, in the volume compiled for the year 1960, there were seventeen of these companies listed.
The origins of these Chartered companies can be traced back to an era during the Middle Ages. It was during this age that it was observed that not all enterprises could be operated by individuals on their own account or by partnerships. It became apparent that a corporate form was necessary to conduct business in an efficient and proper fashion. Following this, the English developed several ways of forming such a corporation; through parliamentary authority, using common law and by prescription or charter of the King.
As suggested in the name, the option of incorporation by charter became the most popular method of formation of these companies. The charter drafted on paper was a document by which the state conferred certain privileges on corporate bodies. Among the privileges accorded these companies was state protection in their excursions whether at home or abroad.
This explains how these corporations accompanied by soldiers spread across the world. In this paper, the discussions presented will delve into the subject of these chartered companies. A brief history and an analysis of their role in history and politics will be presented. Based on the facts a conclusion will be offered suggesting their role if any in business today.
A Brief Contextual History of Chartered Companies
Having established how these companies came into existence it is essential to also answer the question as to why they were created. The answer to this lies in the fact that documentary evidence was required to protect the trades and industries within the country in the event of civil commotion, feudal oppression and general lawlessness. These companies were initially limited to particular localities within a state but owing to mutual advantages to both the Crown and the corporations their realm rapidly expanded.
It has been reported that during periods of border warfare between Scotland, Wales and eventually during the disastrous War of the Roses, numerous of these concessions were granted to the Great trade guilds. Prior to this these private bodies were institutions acting in the common interests of their craft.
However, upon receiving these state concessions, they were accorded numerous immunities, privileges and monopolies in exchange for services and money grants to the Crown in times of emergency. Among the trades that benefited from these concessions included goldsmiths, haberdashers, fishmongers, etc. These charters formed the basis upon which future charters with merchant classes that carried out trade across borders. However, it was the effects of these charters that led to the economic growth that saw an increased need for raw materials.
The Establishment and Organization of East India Company (EIC)
According to reports by Gupta, the British East India Company (EIC) was formed around the year 1600. Within a period of fifteen years after incorporation, the King of England had noted the immense value trade from this region had brought to England.
The principal driving factor behind this immense benefit could be traced to activities of the native rulers abroad and the role of the English Crown. The native rulers sought to attain the most favourable trading treatment possible while the Crown managed to build a monopoly of English trade in the region of the East Indies.
By the second half of the eighteenth century, the power of the Crown had expanded steadily albeit unevenly following the conquest of the Bengal region on the eastern coast in 1765. Following this efforts to expand trade opportunities in the region required the involvement in Indian political affairs with the result that there arose an era of intense political aggression and military conquest.
Following this intense campaign unrest increased within the local communities and eventually led to the Indian Mutiny in 1857-1858. During the period of the campaign, the company gradually shifted its interests from those of a trading corporation to that of a colonial power. As expected this shift in focus also led to a shift in strategy used by the company in the region.
As mentioned in the introduction these charters included privileges such as trade monopolies which were of great value to their home states. It is important to note at this on that prior to this campaign there were other East Indian companies in operation in the region. The Dutch, French and Danish companies had co-existed with the British East India Company in the region from 1600 to the late 1700s.
This suggests that the period of the 1800s marked the beginning of British monopoly in the region and may have been the reason behind the change in focus.
Following the exit of the other companies, the British implemented strategies to increase their authority in their coastal territories and expand control further inland. Owing to this by 1820 the company controlled the greater portion of this sub-continent. Local control was achieved through varied forms of land administration.
This saw the formation of presidencies in Bengal, Madras and Bombay. Majority of local administrators were selected from the land owners who were given charge of the peasantry. In other states, annexation which allowed for the levying of taxes in exchange for protection was practiced. In many cases, the steep charges of annexation eventually led to the complete conquest of regions.
As the territory grew in size the company embarked on training programs in England for administrative officials who were to be incorporated in the civil service. These civil servants were posted in newly created districts inland to perform administrative and company duties.
The district official was charged with duties which included; dispute resolution through court where they acted as magistrates, revenue collection within the district and control of the district police. Within these subunits the knowledgeable and skilled locals were enlisted though owing to racial innuendo they were barred from any high-ranking offices.
Having so far highlighted the role of the monarchs and governments in this history of this company, the discussion will also briefly glimpse at the role of merchants. The main purpose of this company was trade which essentially described the purchase of goods in Asia and their sale in Europe. The agents of the company were accorded the privilege to trade from one part of the Indian Ocean to another with exception of Europe.
This privilege was also extended to license holders not employed by the company also known as free merchants. Within the territories, the company would make arrangements with local rulers to establish factories from which its agents would procure goods and transport them either inland or abroad. Inland trade was meant to be free from duties though these concessions were often vague and prone to misinterpretation by territorial rulers.
As it can be seen from the above paragraph the operations of this company were not without challenges. However, it has been suggested that the work of these merchants in the various territories may have been the driving force behind colonization. In fact some authors have argued that the formation of these companies was part of a political machine with a single objective of gaining resources and control associated with those resources.
This position is reflected in the fact that from the establishment of this company, it concerned itself with trade and expansion of its trade territory. It would be unrealistic in the opinion of mercantilism to continue expansion of trade without government regulation and involvement.
This point is further strengthened by the fact that local rulers in India were used to using despotic means over their citizens. As such it was easy to use strategies such as annexation to gradually take control of the entire region. On clear aspect that is evident from the performance of these companies is the existence of a persistent link between state affairs and regional trade. This is due to the fact that a well-orchestrated partnership between the two allowed these companies to survive in a period that spanned over two centuries.
Conclusion
In this paper, the discussion presented introduced the subject of trading companies that existed within governments that colonized vast territories of the world in the past. The discussion suggests criteria that led to their formation and subsequent sections have shown how these partnerships flourished amid changing times. Owing to this it has been suggested that the merchants of these times provide on possible core of information for free-standing firms today.
It is possible that these companies formed the basis for business entities as we know them today. According to Jones, both firms and individuals attempt to create institutional forms when existing ones fail to efficiently meet transaction relationship requirements. This suggests that what we see today may be due to attempts to replace these companies owing to their inability to survive in the free world.
Bibliography
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