corporations. A large number of economic activities are so complex or costly that they can only be undertaken by the combination of many individuals. It is not surprising, therefore, that all economic systems have been characterized by the development of large institutions such as the state or the firm. Early forms of large-scale undertakings were found in the trading companies whose business took them to the Baltic or Mediterranean. Major companies, trading ever further afield, were granted monopoly rights by the crown. The most famous was the East India Company, chartered in 1600 for a single voyage, subsequently renewed, and eventually established as a continuous operation in 1657. Such joint-stock companies, as the name suggests, brought together the capital, and sometimes the labour, of many partners. By 1617 the East India Company had 36 ships and 934 stockholders. These large organizations, the precursors of modern corporations, proliferated with royal charters granted to the Bank of England in 1694 and, early in the following century, to the South Sea Company, the Royal Exchange Company, and the London Assurance. The government took an opportunity in granting charters to secure promises of loans from the beneficiaries. The appearance of the new stock brought opportunities for speculative gain and there was considerable trading in the shares of the companies which increased the value of their stock. This practice was stimulated by the fact that transactions could be conducted on the basis of a partial down-payment, often as little as 5 per cent. These developments mark the beginnings both of a financial market in company shares and of the emergence of large business organizations, whose need for resources was so great that it lay beyond the wealth of the partners and had to draw on a wider pool of funds through the financial institutions.

Clive H. Lee