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

The Royal African Joint Stock Company (1660-1752) Icon

August 1, 2021

108 The Royal African Joint Stock Company is the predecessor of the present regulated African Company of Merchants.

Both it and the Hudson’s Bay Company had an exclusive privilege by charter which was not confirmed by an act of parliament.

The following had an exclusive privilege confirmed by act of parliament as long as they were a trading company:

  • The South Sea Joint Stock Company
  • The United Joint Stock Company of Merchants trading to the East Indies.

After the declaration of rights after the revolution, the trade was opened to all British.

109 The Royal African Company soon found that they could not compete against private adventurers.

  • It continued to persecute them as interlopers despite the Declaration of Rights.

In 1698, the private adventurers were subjected to a 10% duty on almost all their trades.

  • This tax was to be used by the company to maintain their forts and garrisons.
  • Despite this heavy tax, the company was still unable to keep up with the competition.
  • Their stock and credit gradually declined.

In 1712, their debts became so great that an act of parliament had to secure the company and their creditors.

  • It enacted that the resolution of 2/3 of these creditors in number and value should bind the rest, with regard:
    • to the time for the company to pay its debts, and
    • to any other agreement on those debts.

The sole purpose and pretext of their institution was to maintain their forts and garrisons.

In 1730, the company was in so great disorder that they could not even do this.

  • From 1730 until its final dissolution in 1752, the parliament alloted £10,000 annually for that purpose.

For many years, it was a loser in the negro slave trade to the West Indies.

  • In 1732, it finally gave up the slave trade and sold its negroes to the private traders to America.
  • It employed its staff in a trade to the inland parts of Africa for gold dust, elephants’ teeth, dyeing drugs, etc.
    • Its success in this smaller trade was not greater than their success in their old extensive slave trade.

Its affairs continued to gradually decline.

  • It went bankrupt and was dissolved by act of parliament.

Its forts and garrisons were put under the regulated African Company of Merchants.

Before the Royal African Company’s establishment, there were 3 other joint stock companies successively established for the African trade.*

  • They were all equally unsuccessful.
  • They all had exclusive charters not confirmed by act of parliament.
  • Those charters conveyed a real exclusive privilege.

*Superphysics Note: This implies that the African slave trade was declining that it had to be liberalized through private regulated companies instead of joint stock companies. It seems that join stock companies are for agriculture while the regulated companies are for extractive industries.


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