Mercantile Corporations as Commercial Institutions

⁹⁰ Specific institutions are necessary to facilitate specific branches of commerce. These require a specific and extraordinary costs.

⁹¹ The commerce done with uncivilized nations needs extraordinary protection.

An ordinary counting-house gives little security to the goods of the merchants trading to the African west coast. Their warehouses should be fortified against the barbarous natives.

The Indian government’s disorders rendered such fortifications necessary even among that mild and gentle people.

Mercenaries and Negotiators versus Government Armies and Ministers

The English and French East India Companies were allowed to build their first forts in India under pretence of securing their persons and property from violence.

Other governments are vigorous enough to prevent foreigners from having any forts within their territory.

In such nations, it may be necessary to maintain an ambassador. He may judge cases between:

• his own countrymen in that foreign land, and
• their disputes with the natives.

By his public character, he can:

• interfere with more authority, and
• better protect his countrymen, than any private man.

Commercial interests made it necessary to maintain ministers in foreign countries.

• The Turkey Company’s commerce first established an ambassador at Constantinople.
• The first English embassies to Russia arose from commercial interests.

There was constant interference of commercial interests among the European states. It probably introduced the custom of keeping permanent ambassadors in neighbouring countries.

This custom was unknown in ancient times. It seems not older than the end of the 15th or the start of the 16th century when:

• commerce first extended itself to most European nations, and
• European nations first attended to commercial interests.

⁹² The extraordinary cost of protecting any branch of commerce should be paid for by a moderate tax on that branch.

For example:

• a moderate fee paid by the traders when they first enter the trade, and
• a percentage duty on the goods they export or import to or from the country where protection is needed.
  • This tax is fairer than the fee.

The protection from pirates created the first customs duties.

• A general trade tax pays for the protection of the general trade
• A specific trade tax pays for the protection of that specific trade.

⁹³ The protection of general trade was always:

• essential to national defence and
• the executive power’s duty.

The collection and use of the general customs duties was always left to the executive power.

The protection of a specific trade is a part of the protection of the general trade. Therefore, it is a part of the executive power’s duty.

Both general and specific should always be left to the executive.

However, in most European commercial countries, specific companies of merchants have lobbied the legislature to fully entrust this duty to them.

⁹⁴ These companies might have been useful to introduce some commerce by making an experiment at their own expence which the state did not think it prudent to make.

But in the long-run, those companies proved universally burdensome or useless by their mismanagement or confinement of the trade that they created.