Joint-capital had yet made no inroad into manufacture, one of the earliest instances being a company formed in 1764 with a capital of £100,000 for manufacturing fine cambrics.[56]
The limits of co-operative capitalism at the opening of the period of Industrial Revolution are indicated by Adam Smith in a passage of striking significance:—"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 being 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."[57]
In other words, the businesses amenable to joint-stock enterprise are those where skilled management can be reduced to a minimum, and where the scale of the business or the possession of a natural monopoly limits or prohibits competition from outside.
FOOTNOTES:
[3] A. Smith, Wealth of Nations, Bk. iv., chap. i.
[4] Macpherson, Annals of Commerce, vol. ii. p. 728.
[5] Smith, Memoirs, vol. ii., chap. iii. As the approximate calculation of a very competent business man these figures are more reliable than the official figures of imports and exports, the value of which throughout the eighteenth century is seriously impaired by the fact that they continued to be estimated by the standard of values of 1694.
[6] Whitworth's State quoted, Macpherson, vol. iii. p. 283.
[7] Annals, vol. iii. p. 340.