December 31st is the 400th anniversary of the birth of the world’s first East Indies joint stock company. On that day Queen Elizabeth I granted a royal charter giving a trading monopoly to The Company of Merchants of London Trading into the East Indies.
This was not England’s first royally chartered joint stock company, a distinction given to the Muscovy or Russia Company in 1555, which had been formed out of a venture to find a route to the Spice Islands via Russia. Other companies had followed. Planning for the East Indies company had begun in September 1599, and in October of that year the Queen had met a group of the London merchants involved, and shown her enthusiasm (in part on account of the customs duties she would gain).
The first Governor was Sir Thomas Smyth, former Ambassador to Russia and closely involved in the Muscovy trade and the settlement of Virginia. About 200 subscribers contributed the joint stock for the first voyage, many investing around £200 each – grocers, vintners, tailors, haberdashers, goldsmiths. Initially each voyage was funded separately, capital and proﬁts being divided amongst the stockholders when the ships returned.
The first fleet of five vessels, the largest, the Red Dragon, just 600 tons, left London for the Spice Islands, the East Indies, in January 1601, only a few days after the grant of the company’s charter. They eventually reached Sumatra after 18 months of sailing. Much of the goods they had taken for trade, such as English cloth, proved unsuitable, and the adventurers turned to looting and piracy of other European ships.
After violent struggles with the Portuguese and the Dutch, one of the ships got back to England in May 1603, and the others in September of that year. They brought back a million pounds weight of pepper on which the owners made a substantial profit, and paid £917 in customs duties. 182 of the 460 crew had been lost.
Two more voyages, each with a subscribed capital of £50- £60,000, were highly successful with profits just under 100% and 234% respectively (for the lengthy voyage, not per annum). In 1607 the company was able to reduce its cost base by starting to build its own ships in a yard at Deptford on the Thames. In 1609 a new royal charter was sought with greater powers. At the same time, the method of funding was changed and the capital became permanent, present-day Indonesia, but out of this failure it enabled England to acquire Manhattan, in exchange for one of the smaller Spice Islands. It then concentrated its efforts on India, which its successor company would govern until 1858.
Inscribed stock certificate issued in 1707 for £500 of capital at a price of £113.5 per £100. This is the nearest thing seen to a share in the first East India Company
From its incorporation exactly 400 years ago, the ‘London’ East India Company traded until 1709. By then it had become politically unpopular and lost its monopoly of the Indies trade in 1698. In 1709 the company merged with its young competitor, the ‘English’ East India Company, to form the United Company of Merchants of England Trading into the East Indies.
Only a handful of scripophily papers are known from the first East India Company. We show three of them here.
like a modern company, and only the profits were distributed after each voyage. Over its first 20 years the company imported over £2 million of goods into England at an average profit per voyage of 138%. By 1621, one in 2,000 of England’s population is estimated to have been in the service of the company.
So began the activities of the company that was to lay the foundations of the British Indian Empire. The company eventually lost its fight against the much larger Dutch East Indies company for
Receipt for a 51⁄2% call on £1,800 of the ‘old’ company’s stock made in February 1709 (one month before the merger with the ‘new’ company) ‘to comply with the Award made by the Most Honourable the Lord High Treasurer of Great Britain, for Uniting the Two Companies’. A similar piece is known for a call of 10% in January 1709
The East India Company, Brian Gardner, London, 1971, an introductory history of the company and its successor for the entire period 1600-1874
Nathaniel’s Nutmeg by Giles Milton, London, 1999 – an entertaining dramatised account of the company’s early ventures and battles with the Dutch in the Spice Islands, now Indonesia
The Constitution and Finance of English, Scottish and Irish Joint- Stock Companies to 1720, Vol. I by W R Scott, Cambridge, 1912 – a detailed description of the capital structure and stock market performance of early British companies including the several East Indies companies