The Simplified Wealth of Nations of Adam Smith, Book 5, Chapter 1l: The Royal African Company
Chapter 1l: The Royal African Company (1660-1752)108
The Royal African Company is the predecessor of the present African Company.
- It had an exclusive privilege by charter which was not confirmed by an act of parliament.
- After the declaration of rights after the revolution, the trade was opened to all his majesty's subjects.
- The Hudson's Bay Company is in the same situation as the Royal African Company in their legal rights.
- Their exclusive charter 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 Company
- The United Company of Merchants trading to the East Indies.
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 maintain the competition.
- "Their stock and credit gradually declined."
- In 1712, their debts became so great that an act of parliament was necessary to secure the company and their creditors.
- It was 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, the parliament allowed £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.
- It sold its negroes to the private traders to America.
- It employed its servants in a trade to the inland parts of Africa for gold dust, elephants' teeth, dyeing drugs, etc.
- Its success in this more confined 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 vested in the regulated company of merchants trading to Africa.
- Before the Royal African Company's establishment, there were three 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.
Next: Chapter 1m: The Hudson's Bay Company