Private Copartneries vs Joint Stock Companies

¹⁰⁴ Joint stock companies established by royal charter or by act of parliament differ from:

• regulated companies and
• private copartneries.

¹⁰⁵ 1. In a private copartnery, a partner needs the consent of the company to:

• transfer his share to another person,
• introduce a new member into the company.

Upon proper warning, each member may:

• withdraw from the copartnery, and
• demand payment for his share of the common stock from the copartnery.

In a joint stock company, on the contrary, each member:

• cannot demand payment for his share from the company
• can, without the company’s consent:
  • transfer his share to another person, and
  • introduce a new member.

The value of a share in a joint stock is always its market price. This is different from the stated value in the stock of the company.

¹⁰⁶ 2. In a private co-partnery, each partner is bound for the debts of the company to the extent of his fortune.

In a joint stock company, on the contrary, each partner is bound only to the extent of his share.

¹⁰⁷ The joint stock company’s business is always managed by an executive board (court of directors) which is managed by a board of investors (court of proprietors).

But most of those investors seldom pretend to understand the company’s business.

• When the spirit of faction does not prevail among them, they give no trouble about it.
• They are content to receive yearly dividends as the executives think proper to give to them.

This total exemption from trouble and risk, beyond a limited sum, encourages many people to become adventurers in joint stock companies. *

They would never hazard their fortunes in any private co-partnery. Thus, joint stock companies draw more stocks than any private co-partnery.

• The South Sea Company’s trading stock at one time amounted to more than £33,800,000.
• The Bank of England’s divided capital [a joint stock?] is presently £10,780,000.

The executives of such companies are the managers of other people’s money.

• They cannot be expected to watch over it with the same vigilance as the partners in a private co-partnery.
• They are like the stewards of a rich man.
  • They think that attending to small matters are not for their master’s honour.
  • They very easily exempt themselves from attending to such matters.
• Negligence and profusion, must always prevail, more or less, in the management of the affairs of such a company.

Joint stock companies for foreign trade seldom were able to compete against private adventurers.

• They very seldom succeeded without an exclusive privilege.
• They frequently have not succeeded even with an exclusive privilege.
• Without an exclusive privilege they commonly mismanaged the trade.
• With an exclusive privilege they both mismanaged and confined it.