1. It is evident that there was in early modern times a movement for the organization and chartering of companies for distant commerce, closely dependent on their respective governments. These companies had their period of rise in the sixteenth century; a rapid and wide-spread development in the seventeenth; and a subsequent decline and discredit in the eighteenth. The movement was European; every country whose situation or ambitions would at all admit of distant trading, and whose system of commerce was not, like that of Spain and Portugal, already stereotyped under government control, adopted approximately the same policy.
2. To each of these companies was secured by its charter the monopoly of trade in a particular region. Its members alone had power or right to carry on commerce with a specified people, over a specified extent of coasts or lands, and during a definite period of years. This monopoly might be only as against the fellow-countrymen of the members of the company; but an effort, generally successful, was made to exclude all other Europeans from each reserved field of commerce.
3. The companies were based on unions of the capital of many merchants or other adventurers. An official Dutch letter on the trade with America speaks of "knowing by experience that without the common assistance of a general company navigation and commerce could not be practised, maintained, and defended in the regions and quarters designated above, because of the great risks from corsairs, pirates, and other extortions which are met with upon such voyages." [Footnote: Letters to the Dutch West India Company, June 9, 1621.] The preliminary equipment of ships, the purchase of supplies and merchandise, the acquisition of land, the building of forts and the supply of weapons and military material; the payment of a military force to protect their commerce against natives or interloping Europeans; the expenses, in many cases, of transporting and supporting colonists; and, finally, the long waiting before returns could be reasonably hoped for—some or all of these expenses were inseparable from the whole plan of establishing distant trade. It was no wonder that individual traders gave place to great unions of the merchants of London, Amsterdam, or Dieppe, who risked part of their means and united their resources to form companies to trade with the East and West Indies, Africa, and other outlying parts of the world.
4. Neither the possession of a monopoly nor the creation of a large, joint capital was considered enough to launch an enterprise of this kind. The grant of public or political powers by government was necessary to make its economic objects attainable, and these were given with a free hand. The companies very generally received, explicitly or by implication, rights of peace and war, of supreme justice, of administrative independence, and of legislation for their own territory, members, and servants. A chartered company was in many cases the holder from the crown of a wide fief in which it possessed more than feudal powers. As a matter of fact, the companies generally remained quite dependent on the home authorities, but this resulted from the desire to save expense, from the supremacy of commercial ideals, or from patriotism, rather than from deficiencies in their charters.
5. In the grant of these extensive political powers the home governments had ulterior motives. The seventeenth century was a period of intense international rivalry, and the chartered commercial companies were pieces in the game. It was not mere profit in pounds, shillings, and pence which Elizabeth hoped to obtain from the voyages of the ships of the East India Company, but a weakening of the power and wealth and colonial dominion of Spain. Even in the more peaceful times of James, the Spaniards saw, and were justified in seeing, in the popular interest in Virginia another phase of the national hatred of Spain. [Footnote: Letters from Zuniga to Philip III, in Brown, Genesis of the United States, docs, xxviii.-xxxiii., etc.] It was at the close of the twelve years' truce between the Netherlands and Spain, just when the war was being resumed, that the Dutch West India Company was formed, and its greatest activity was in a warlike rivalry with its great opponent in South America. "The reputation of this crown" was combined with "the glory of God" in the charter of the Canada Company; and most of the commercial and colonizing projects of France in the seventeenth as in the nineteenth century, had a large element of political pride behind them. Sometimes it was warlike conquest, sometimes the expulsion of a rival, sometimes the acquisition of a new base of operations, sometimes the obtaining of a more favorable balance of trade, sometimes mere international rivalry; but whatever the other elements, there were always some political objects in addition to the hope of obtaining dividends from trade.
6. For the history of America, the most important characteristic common to the chartered companies of the seventeenth century is the territorial foothold they obtained in the regions where they possessed their monopolies. It might be only a few acres of ground used for a fort, storehouses, and dwellings, which was all the English East India Company possessed for the first century and a half of its existence; or it might be the almost limitless domains of the Canada or Virginia Company. There was no distinction between two kinds of companies, one for commerce, the other for colonization, but simply one of relative attention given to the two interests, according to the character of the regions for which the companies had obtained their concessions. All the companies expected to carry on commerce; all expected to plant some of their fellow-countrymen on the soil of the country with which they meant to trade. If the region of their activity was the ancient, wealthy, thickly settled, and firmly governed coast of India, the settlers were only a few servants of the company. If, on the other hand, the region for which the monopoly of the company was granted was a broad and temperate tract, occupied by a sparse population of savages, and offering only such objects of trade or profit as could be collected slowly or wrested by European labor from, the soil or the forest, the quickest way to a commercial profit was the establishment on the distant soil of a large body of colonists from the home land.
This necessity for colonization in order to carry out their other objects makes the chartered commercial companies of the seventeenth century fundamental factors in American history. The proprietary companies of Virginia, Massachusetts, New Netherland, Canada, and other colonies were primarily commercial bodies seeking dividends, and only secondarily colonization societies sending over settlers. This distinction, and the gradual pre-dominance of the latter over the former, is the clew to much of the early history of settlement in America. The commercial object could only be carried out by employing the plan of colonization, but new motives were soon added. The patriotic and religious conditions of the times created an interest in the American settlements as places where men could begin life, anew with new possibilities. Hence the company, the home government, dissatisfied religious bodies, and many individuals, looked to the settlements in America with other than a commercial interest. The policy of the companies was modified and eventually transformed by the influence of these non-commercial interests.
As financial enterprises, the chartered commercial companies were subject to such great practical difficulties that few of them survived for any great length of time or repaid their original investment to the shareholders. Some were reorganized time and again, each time on a more extensive scale, and each time to suffer heavier losses. [Footnote: W. R. Scott, "The Royal African Company" (Am. Hist. Review, VIII., 2).] They experienced much mismanagement and softie peculation and fraud on the part of their directors; in some cases false dividends were declared for the purpose of temporarily raising the value of the stock. Their credit was bad, and they sometimes had to borrow money at fifty and even seventy-five per cent, interest. [Footnote: Bonnassieux, Les Grandes Compagnies de Commerce, 494, etc.]
They encountered other difficulties quite apart from the incompetency or dishonesty of their directors. Parliaments and States-General were opposed to monopolistic and privileged companies, and threw what obstacles they could in their way; and political exigencies often forced even the sovereigns who had given them their charters to disavow and discourage them. [Footnote: Letter of October 8, 1607, from Zufiiga to the king of Spain, in Brown, Genesis of the United States, I., 121.] Their greatest difficulties, how-ever, arose from the very nature of the problem which they were trying to solve. Distant commerce with barbarous races, amid jealous rivals, carried on with insufficient capital; the persuasion of reluctant emigrants to establish themselves in the wilderness at a time when the mother-country was not yet overcrowded; the long waiting for returns and the failure of one dream after another—it was these difficulties in the very work itself that led to the failure of most of the companies and the scanty success of the others.
Nevertheless, the companies played a very important part in the advancement of civilization during the period of their existence. They enriched Europe with many products of the New World and the more distant Old World, which could hardly have reached it, or reached it in such abundance, except for the organized voyages of the chartered companies. The formation of chartered companies relieved certain nations of their dependence upon other nations for some of the necessities and many of the luxuries of life. National independence was furthered, at the same time that foreign products were made much cheaper. Spices, sugar, coffee, tea, chocolate, tobacco, cotton, silk, drugs, and other articles were made accessible to all. New shipping was built by the companies and additional commercial intercourse created. [Footnote: Bonnassieux, Les Grandes Compagnies de Commerce, 514.] New territories were made valuable and new centres of activity created in old and stagnant as well as in new and undeveloped countries. Above all, the chartered companies were the actual instruments by which many colonies were founded, and a strong impress given to the institutions of these colonies through all their later history.