W.E.A. LECTURE.

Hawera Star, Volume XLVI, 17 May 1926, Page 10

W.E.A. LECTURE.

THE TRADING COMPANIES. Interesting information relative to foreign trade in tlie medieval, age was given by Mr .Brotherton, W.E.A. U' (; - turer, at the last meeting of the Halve ra class.

When foreign trade was dangerous, and a large part of the world practically unknown, it was almost impossible to get individuals with sufficient capital! to embark on so hazardous 1 an enterprise. The. pioneers who explored the unknown regions were assisted either by king or city corporation, and .usually the discoverer died in poverty, having expended his fortune' for the benefit, of mankind. Under the circumstances it was found necessary to give a. group of merchants a monopoly of some special foreign distant land and allow no one else to trade there, so that some; profit might he made hy those who discovered new markets

in the middle ages spices were the most valuable product from outside Europe, and the attempts to obtain them influenced the whole of English trading policy. A Papal Bull had divided the newly-discovered markets in America- and the East between Spain and Portugal, and the normal routes to the spice islands were held by them. It is inteuesting in. this connection to note that Columbus was attenitping to reach tile spice islands when he- discovered America, the existence of which had hitherto been known only as a mythical ice-bound land visited by the Vikings in the 9th century. Columbus himself did not rea'is© the position at first, and the islands he discovered were called the West Indies and the inhabitants ’of the mainland lied Indians, simply because lie fancied h© had reached the East Indies on the other side of th© Pacific Ocean.

It will be seen then that- the question, of alternative routes to the Spice Is’ands had early occupied men’s attention, and the English entered the field with yet another incentive. There was at that time a very strong objection to the export of 'bullion, and- in order to avoid tills it was necessary to sell English goods, by far the most important of which was, cloth. Now tropical countries are not the best in which to look for a market for thick woollen cloth, so not unnaturally the English turned north and sought for both N.E. and N.W. passages in the Arctic regions. This was not so unreasonable as it sounds, as their geographical knowledge was very vague, and they did not know to what extent the north Avas permanently ice-bound, and the Arctic seemed to offer good prospects for the sal e , of doth, as they did not realise how sparsely it was populated. In the middle of the 16th centniy, two men— Chancellor and Willoughby—set out to look for Cathay, in China, by the N.E. passage. Instead, they found Archangel, and brought back the first Russian ambassador, and incidentally found a roundabout route to the East via Moscow to Bakara, where they found a fair attended by merchants from India and China.

This was a third route, as previously Eastern d inducts had come overland through Persia to Turkey, and thence via the M-editteranean to Europe. This route was exploited by the Levant Company. in addition to this there was the sea route to the Indies, discovered by Yareo de Gama. The Russian route was, however, discovered before the establishment , of both; the Dutch and the, English East India companies, but the Portuguese were already in possession. The: English East India Company was founded very largely by a number of Levant merchants, whose trade was momentarily slack, to fetch th e same products by sea as were usually brought overland. The East India Company in time completely surpassed the Levant Company, formed Britain’s Empire' in India, and only handed over its possession to the British Government after the Indian Mutiny. It is interesting to notice- that India itself was only touched originally to obtain products for exchange in the Spice Islands. In addition to the companies that were engaged in the East, ther e were the Merchant Adventurers and the Eastland Companies that traded with Flanders and the Baltice. Both tended to come, into conflict with the Hanseatic League, which made strenuous endeavours to eject them. The local authorities usually favoured them, however, on account of the trade they brought. It must not be supposed that the companies were left- to exploit their monopolies unchallenged. There wer.?- numerous private traders, or •‘interlopers,” as they were cal-’ed, who, once the trade had been star tod, were prepared to take advantage of the proven work of others. The chief argument against these men, in addition to the fact that the original discoverer -of the market should have a monopoly for -a sufficient period to recoup himself for his material outlay, was that they frequently came, for a single voyage, and by force or fraud made a large profit and then never returned. This, of course, made things very difficult for the original company which was held responsible- for these outrages, and sometimes had to pay compensation for the crimes of men who were definitely trespassing in the company’s preserves. Apart from the interlopers, the companies had a strenuous fight against agitation for their abolition by Parliament. In a- previous lecture. I referred to the abuse of the patents of mono po’y. This stirred up very strong feeling against all monopolists, but the Long Parliament, which abolished all internal monopolies except patents to original inventors for 14- years only, saw that the trading companies exploiting distant markets wor© very similarly placed to the inventor, and th? storm was weathered for the time. The companies were, however, always being attacked. The Merchant) Adventurers were always being accused of not finding sufficient markets for the English cloth, .particularly finished cloth, and the East India Company was criticised regularly for the export of bullion, a criticism ably met by Thomas Munn in “England’s Treasure by. Foreign Trade,” which is probably the best contemporary defence of the company system. Many of the companies, however. periodically lost favour, and a rival association would rim for a -short time, but before long it either collapsed or e'rg? the two agreed to amalgamate. The trading companies, it must ho admitted, filled a- definite want in the organisation of the time. While trade was dangerous and unsettled and new markets being constantly discovered a monopoly was justified, and some form of combination was necessary. This took the form of either the joint slock, or- origina-l'y the regulated company. This last consisted of a number of merchants under a common executive, who paid fees to rite company in return for its) protection and the right to join in its monopoly, hut each man traded with, his own capital within the company, and joint' ventures between members were the exception rather than the rule. This was the simplest kind of company, as it included only substantial merchants, and the company was required to do comparatively little. The joint stock company, now familiar enough, was far harder to work satisfactorily. The fact that anyone could lie a. shareholder and not only merchants, was attacked as not training men to be efficient traders bv allowing them to thus invest their

money for others to utilise. Tun; In, the long run the joint stock company was triumphant. In most cases the companies ended when they had outgrown their usefulness. The monopoly would be withdrawn, the trade thrown open and the entrance feen necessarily lowered. The company might then just lie disbanded, which was the fate of most of the companies trading with Europe, or, as in the case of the African and East Indian Companies, they bight become the governing body of a considerable territory, and usually handed over their powers to the Imperial Government in the 19th century. Taken all round, the trading companies must he regarded as fairly efficient and quite reasonable stage in the development of trade abroad, and their passing opened the way for modern competitive methods anil direct governmental control in the colonies and in India.