The Simplified Wealth of Nations of Adam Smith, Book 5, Chapter 1i: The Turkey Company
Chapter 1i: The Turkey Company (1581-1825)
A Turkey Company merchant, Francis Levett
The fine for admission into the Turkey Company was formerly:
- £25 for all persons under 26 years old, and
- £50 for all persons above 26 years old.
Only mere merchants could be admitted.
- This restriction excluded all shop-keepers and retailers.
- By a bylaw, no British manufactures could be exported to Turkey except in the company's ships.
- Those ships always sailed from the expensive port of London.
- This restriction confined the trade to London and its traders.
- By another bylaw, the following could not be admitted as a member:
- persons living within 20 miles of London, and
- persons not free of the city.
- These two restrictions excluded all but the freemen of London.
- The time for the loading and sailing of those ships depended on the directors.
- They could easily fill them with the goods of their own and their friends.
- Others were excluded as making their proposals too late.
- This company was a strict and oppressive monopoly.
- Those abuses created the act of the 26th of George II. c. 18.
- It reduced the fine for admission to £20 for all persons without:
- any age distinction, and
- any restriction to mere merchants or freemen of London
- It granted to all such persons the liberty of:
- exporting permitted British goods from all British ports to any Turkish port
- importing all permitted Turkish goods from Turkey after:
- paying general customs duties, and
- paying the particular duties for defraying the company's costs
- submitting to:
- the authority of the British ambassador and consuls in Turkey, and
- the company's bylaws
- To prevent any oppression by those bylaws, the same act ordained that if seven company members were aggrieved by any bylaw enacted after this act was passed:
- they can appeal to the Board of Trade and Plantations (now a privy council) provided such appeal was brought within 12 months after the bylaw was enacted
- they can bring a like appeal, provided it was within 12 months after the day this act was to take place.
- One year may not always be enough to reveal the pernicious tendency of a bylaw to all the members of a big company.
- If they discover it, the Board of Trade and the committee of council cannot give them any redress.
- The object of most of the bylaws of all regulated companies and all other corporations, is not so much to oppress existing members.
- Its object is more to discourage others from becoming members.
- This may be done through a high fine and many other contrivances.
- The constant view of such companies is always:
- to raise their own profit rate as high as they can, and
- to keep the market as understocked with goods as much as possible.
- These can only be done:
- by restraining the competition, or
- by discouraging new adventurers from entering the trade.
- A fine even of £20 might be insufficient to discourage anyone from entering the Turkey trade with an intention to continue in it.
- It might be enough to discourage a speculative merchant.
- In all trades, the regular established traders, even those not incorporated, naturally combine to raise profits.
- Their profits are most likely to be kept down to their proper level at all times by speculative competition.
- The Turkey trade was somewhat laid open by this act.
- It is still very far from being free.
- The Turkey Company maintains an ambassador and two or three consuls.
- Those ministers should be maintained by the state like other public ministers.
- The trade should be laid open to all.
- The taxes levied by the Turkey company might afford a revenue to enable the state to maintain such ministers.
Sir Josiah Child observed that regulated companies frequently supported public ministers.
- Those companies never maintained any forts or garrisons in the countries where they traded.
- On the other hand, joint stock companies frequently maintained forts.
- In reality, regulated companies seem more unfit for maintaining forts than joint stock companies.
- The directors of a regulated company have no interest in the prosperity of the company's general trade which maintains such forts.
- The decay of that general trade may even be advantageous to their own private trade.
- It would:
- lessen their competitors and
- enable the directors to buy cheaper and sell dearer.
- On the contrary, the directors of a joint stock company only have their share in the profits made on the common stock they manage.
- They have no private trade which can interfere with the company's general trade.
- Their private interest is connected with:
- the prosperity of the company's general trade, and
- the maintenance of the forts and garrisons necessary for its defence
- They are more likely to have that continual and careful attention which that maintenance requires.
- The directors of a joint stock company always manage a large capital.
- They may properly employ part of this large capital in building, repairing, and maintaining such forts and garrisons.
- But the directors of a regulated company have no common capital to manage.
- They have no other fund to use for forts and garrisons other than the casual revenue from:
- the admission fines, and
- the corporation duties on the company trade.
- Though they had the same interest to maintain such forts and garrisons, they can seldom have the same ability to do so.
- The maintenance of a public minister requires no attention and only a moderate and limited expence.
- It is much more suitable for a regulated company.
Next: Chapter 1j: The African Company