1 Introduction 2 The collective-action difficulties of creating an effective state 3 The pre-state of England and Spain: the importance of man-made geography 4 The early state in England and Spain 5 The minimally effective state 6 The truly effective state 7 English and Spanish colonial policies 8 The English colonies 9 Colonial Mexico 10 The collective-action problems of the formation of the United States 11 The collective-action problems of the formation of Mexico 12 The implications for development theory

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The Long Process of Development: Building Markets and States in Pre-industrial England, Spain and their Colonies

Business in pre-industrial Europe was predominantly commercial, and its organization served the two basic requirements of commerce-representation in distant markets and financing. The various forms of organization included the sea loan, commenda, the share venture, the joint stock company, the compagnia, the holding company, the limited partnership, and commission. This paper examines these forms of organization and how they evolved to meet the needs of business enterprise.

Business Organization in Pre-Industrial Europe

The foundation of the East India Company coincided with a dramatic expansion of England's overseas activities brought about through new trading, colonial, and exploratory ventures. This period has received considerable attention in relation to the development of the British Empire, but little is known about how merchants and other commercial actors invested in and contributed to these organizations. Using a newly developed dataset of membership and investment in overseas activities, this article reconstructs the individual portfolios of East India Company members in 1599, 1613, and 1624. This analysis reveals that investors took advantage of opportunities across the globe, and diverse portfolios were common. The implications of this are two?fold. First, this article makes clear that our current understanding of the East India Company as closely connected with the Levant Company is not sustained with evidence from investment patterns. Second, the interests of London's commercial community suggest new avenues for understanding the early British Empire as a tightly connected, globally focused set of institutions, people, and networks.

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The Global Interests of London's Commercial Community, 1599-1625: investment in the East India Company

Richard Tawney (1880-1962), who taught at the London School of Economics from 1917 to 1949, was unquestionably one of the very most important economic historians that England has ever produced: so much so, indeed, that the era of his major research and publications, 1540 - 1640, has justly come to be known as i?½Tawneyi?½s Centuryi?½. Those publications, and the debates that they provoked, concern the origins or roots of modern capitalism and (implicitly) capitalist entrepreneurship that were supposed to have been established in this century. Though the roots of those economic developments, in particular those leading to more modern forms of industrial capitalism, may indeed lie in that century, nevertheless the main thesis of this study is that most of their positive fruits are instead to be found in the ensuing century of 1640 - 1740, the century preceding the advent of the modern Industrial Revolution. Tawneyi?½s seminal scholarship, towards these ends, was concerned with two major issues. The first considered in this study is his 1926 monograph: Religion and the Rise of Capitalism, which in part was designed to promote, in the English-speaking world, Max Weberi?½s famous thesis (1905) on i?½The Protestant Ethic and the Spirit of Capitalismi?½. Both works focused on how three elements of one Protestant sect in particular, the Calvinists (from 1536), came to influence so deeply that Protestant Ethic and new ethos of modern capitalism: Predestination, the Calling, and i?½Worldly Asceticismi?½. The significance of this form of Protestantism in England is that Calvinists and other Non-Conformists or Dissenters, those who refused to conform to the Church of England after the 1660 royalist Restoration, constituted about one half of the known scientists, innovators, and entrepreneurs from the later 17th century and through the Industrial Revolution era (1760-1820), though constituting only 5 percent of the population. The debate concerns the roles of their restricted (legislated) minority status and of schools and superior educational systems that they had to establish, but also the applicability of the Weber-Tawney thesis, in explaining their superior economic performance. Tawneyi?½s second major issue was that of i?½agrarian capitalismi?½, along with the supposed i?½rise of the gentryi?½: involving the transfer of vast amounts of land from the old aristocracy, the crown and church together, and finally the free-holding yeomanry into the hands of a non-aristocratic upper class who were far more predisposed and able to engage in profit-maximizing agriculture, especially through enclosures and the technology of the New Husbandry. But if Tawney dates this shift from Henry VIIIi?½s Dissolution of the Monasteries, in 1536, this study contends that the real shift, but certainly a major shift, to i?½agrarian capitalismi?½, involving enclosures and the New Husbandry, again came only after the 1660s. To provide a contrast to Tawneyi?½s work, this study examines two alternative theses on the origins of modern industrial capitalism within Tawneyi?½s century (1540-1640): (1) Earl Hamiltoni?½s thesis of i?½Profit Inflationi?½, one fully endorsed by Keynes; and (2) John Nefi?½s i?½Early Industrial Revolution in Tudor-Stuart Englandi?½. The Hamilton thesis is rejected in this study, with the contention that its true importance was to inspire Nefi?½s counter-thesis: on the decisive shift from wood and charcoal fuels to coal fuels, which in turn required very major technological changes (in furnace designs), which in turn led to major increases in industrial scale, and (for Nef) to true i?½industrial capitalismi?½. This study, noting the importance of Wrigleyi?½s similar thesis on a shift from an organic (wood-based) to an inorganic (coal-based) industrial economy, supports the essence of the Nef thesis i?½ but only for the period after 1640 (with new data). Finally, this study considers two other related changes so necessary for the development of early-modern capitalism, in this era: the development of the Full Rigged or Atlantic Ship (but from the 1450s) and the overseas joint-stock trading companies. Again, their major impact came after 1660, with the i?½New Colonialismi?½ (Hobsbawm) or i?½Commercial Revolutioni?½ (Davis). The study also considers the history of the English joint stock companies, from the first joint-stock company, in overseas trade (the Muscovy Company of 1553) to the Bubble Act of 1720, which restricted their formation until 1825. Also included is their role in the so-called i?½Financial Revolutioni?½ from 1694 to 1757 (i?½Pelhamsi?½s Conversioni?½ of the national debt).

Tawney's Century (1540-1640): the Roots of Modern Capitalist Entrepreneurship in England

welcome to the people.” The issues raised in relation to the Merchant Adventurers in 1604, encompassing the rights of Englishmen overseas, the government of trade, and the powers of merchants in relation to the state, framed much of the debate on corporations for the century to come. At least one high profile critic of the Company believed that “what p[re]tences soev[er] the Marchantes make to drawe themselves into companyes, they ev[er] have in yt their privat ends, and all those take their ground from the Marchantes adventurers.” The lesson was clear: “yt is not Convenient that Marchantes have such power passed ov[er] unto them, as that thereby they may govern the estate of thinges both at home and abroad as they list, and they not to be Curbed therein by the State.” The Merchant Adventurers had to contend with such arguments until 1689, when the Company lost most of its privileges. In the meantime, of course, it had ceased to be the most powerful or even controversial merchant company, eclipsed by the great trans-national corporations. But the controversies associated with the Merchant Adventurers continued to shape debates on trading companies, and it would be interesting to consider how organisations like the East India and Royal Africa Companies drew on the experiences of their forbearer in deflecting charges of monopoly. Certainly the merchant company had a history in England that long predated the Elizabethan wave of incorporations that gave rise to England’s first trans-continental companies. Much of the early modern debate about the relationship between states and merchants emerged in this setting. A “fully realised global history of corporate constitutionalism” will surely find room for the Merchant Adventurers, and the Anglo-European context in which they operated.

Thomas Stuart Willan

Papers

The early history of the Russia Company, 1553-1603