In 1722, this company petitioned the Parliament to be allowed to divide their immense capital of more than thirty-three millions eight hundred thousand pounds, the whole of which had been lent to government, into two equal parts: The one half, or upwards of sixteen millions nine hundred thousand pounds, to be put upon the same footing with other government annuities, and not to be subject to the debts contracted, or losses incurred, by the directors of the company in the prosecution of their mercantile projects; the other half to remain, as before, a trading stock, and to be subject to those debts and losses.The petition was too reasonable not to be granted.In 1733, they again petitioned the Parliament that three-fourths of their trading stock might be turned into annuity stock, and only one-fourth remain as trading stock, or exposed to the hazards arising from the bad management of their directors.Both their annuity and trading stocks had, by this time, been reduced more than two millions each by several different payments from government; so that this fourth amounted only to L3,662,784 8s.
6d.In 1748, all the demands of the company upon the King of Spain, in consequence of the Assiento contract, were, by the Treaty of Aix-la-Chapelle, given up for what was supposed an equivalent.An end was put to their trade with the Spanish West Indies, the remainder of their trading stock was turned into an annuity stock, and the company ceased in every respect to be a trading company.
It ought to be observed that in the trade which the South Sea Company carried on by means of their annual ship, the only trade by which it ever was expected that they could make any considerable profit, they were not without competitors, either in the foreign or in the home market.At Carthagena, Porto Bello, and La Vera Cruz, they had to encounter the competition of the Spanish merchants, who brought from Cadiz, to those markets, European goods of the same kind with the outward cargo of their ship; and in England they had to encounter that of the English merchants, who imported from Cadiz goods of the Spanish West Indies of the same kind with the inward cargo.The goods both of the Spanish and English merchants, indeed, were, perhaps, subject to higher duties.But the loss occasioned by the negligence, profusion, and malversation of the servants of the company had probably been a tax much heavier than all those duties.That a joint stock company should be able to carry on successfully any branch of foreign trade, when private adventurers can come into any sort of open and fair competition with them, seems contrary to all experience.
The old English East India Company was established in 1600by a charter from Queen Elizabeth.In the first twelve voyages which they fitted out for India, they appear to have traded as a regulated company, with separate stocks, though only in the general ships of the company.In 1612, they united into a joint stock.Their charter was exclusive, and though not confirmed by Act of Parliament, was in those days supposed to convey a real exclusive privilege.For many years, therefore, they were not much disturbed by interlopers.Their capital, which never exceeded seven hundred and forty-four thousand pounds, and of which fifty pounds was a share, was not so exorbitant, nor their dealings so extensive, as to afford either a pretext for gross negligence and profusion, or a cover to gross malversation.
Notwithstanding some extraordinary losses, occasioned partly by the malice of the Dutch East India Company, and partly by other accidents, they carried on for many years a successful trade.But in process of time, when the principles of liberty were better understood, it became every day more and more doubtful how far a Royal Charter, not confirmed by Act of Parliament, could convey an exclusive privilege.Upon this question the decisions of the courts of justice were not uniform, but varied with the authority of government and the humours of the times.Interlopers multiplied upon them, and towards the end of the reign of Charles II, through the whole of that of James II and during a part of that of William III, reduced them to great distress.In 1698, a proposal was made to Parliament of advancing two millions to government at eight per cent, provided the subscribers were erected into a new East India Company with exclusive privileges.
The old East India Company offered seven hundred thousand pounds, nearly the amount of their capital, at four per cent upon the same conditions.But such was at that time the state of public credit, that it was more convenient for government to borrow two millions at eight per cent than seven hundred thousand pounds at four.The proposal of the new subscribers was accepted, and a new East India Company established in consequence.The old East India Company, however, had a right to continue their trade till 1701.
