Part 3e of Chapter 1 of Book 5 of The Wealth of Nations Simplified

Private Regulated Companies Versus Joint Stock Companies Icon

August 1, 2021

95 Private regulated companies are companies which:

  • do not do business on a joint stock of capital,
  • are obliged to admit any qualified person who;
    • pays a fee
    • agrees to submit to company regulations, and
    • has each member using his own capital at his own risk.

Joint stock companies are companies which:

  • do business on a joint stock of capital, and
  • has each member sharing in the common profit or loss in proportion to his share in this stock

Regulated and joint stock companies sometimes have, sometimes do not have, exclusive privileges.

96 Private regulated companies are enlarged monopolies that resemble guilds or the corporations of trades. Such guilds are so common in all European cities.

Private regulated companies Corporation of Trades (Guilds)
A person must join a private regulated company to do foreign trade A person must get approval from a guild before engaging in an incorporated profession

A company’s monopoly is more or less strict:

  • as the terms of admission are more or less difficult, and
  • as the company executives have more or less power to confine the trade to themselves and their friends.

In the most ancient regulated companies, the privileges of apprenticeship were the same as in other corporations. Apprenticeships entitled the apprentice to become a member after serving his time to a member of the company:

  • without paying any fee or
  • upon paying a much smaller fee.

“The usual corporation spirit, wherever the law does not restrain it, prevails in all regulated companies.”

“When they have been allowed to act according to their natural genius, they have always, in order to confine the competition to as small a number of persons as possible, endeavoured to subject the trade to many burdensome regulations.”

They have become altogether useless and insignificant when the law has restrained them from doing this.

97 The private regulated companies for foreign commerce presently in Great Britain are:

  • Hamburgh Company or the ancient merchant adventurers company
  • The Russian Company
  • The Eastland Company
  • The Turkey Company
  • The African Company of Merchants


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