Chartered Companies. Corporations formed through a grant by a sovereign power for the purposes of foreign trade. These companies had Italian origins and became popular among European countries such as Great Britain in the sixteenth and seventeenth century. After a long economic depression in the sixteenth century, proposals for the formation of trading companies within the Spanish empire abounded during the eighteenth century, and companies reached their heyday at mid-century. Principally directed at expanding trade between Spain and its American kingdoms, companies were established with varying degrees of success for trade with Honduras (1714); Caracas (1728); the Philippines (1733); Cuba (1740); Portugal (1746); Buenos Aires, Cartagena, Veracruz, and Panama (1747); and the islands of Santo Domingo, Puerto Rico, and Marguerita (1755). After negotiation between merchants and the crown, the king would typically issue a charter (cedula real) directing formation of a company for either exclusive or privileged trade with specific American ports. The charter would establish a starting capital and sometimes designate the number of years for which the contract was valid. Shares would then be sold and when the company had attained sufficient funds, business would begin.
The establishment of trading companies was influenced by Colbertian mercantilism, the philosophy and practice of state sponsorship of factories and monopolies to stimulate production, with two primary intentions in the Americas: to support a growing state apparatus and to keep out imperial rivals. Moreover, Spanish authorities hoped to end the widespread illegal trade conducted through English, Dutch and French trading partners. The companies were an alternative to the fleet system, by which once a year, each of two treasure ship convoys left Spain at different times, one to Veracruz and the other to Terra Firme. By the early eighteenth century the fleet system was generally acknowledged to be seriously outmoded to the needs of empire. It was slow, costly, and because of its predictability, highly susceptible to piracy. Compounding these ills, the fleet system prevented Spain from maximizing the profits of empire, kept the colonies undersupplied, restrained the development of industry in Spain, encouraged contraband, and created powerful interest groups antithetical to the Bourbon, absolutist ideal.
Company formation was intended to increase trade in areas peripheral to traditional Spanish interests where contraband had flourished. These regions typically did not produce precious metals, but rather cash crops such as indigo, tobacco, and cacao. At the same time, companies theoretically would reduce the influence of merchant monopolies in Cádiz, Mexico, and Lima by expanding the number of ports open to trade. Companies further provoked opposition in the Americas by obliging colonists to sell produce for less and to buy imported goods for more than they had been accustomed to. While the goal of the chartered companies was to increase trade, the monopolistic nature of the companies consequently went against free trade capitalist philosophy.
Despite opposition on several fronts, the monarchy was encouraged by the early success of the Compañía Guipuzcoana, or Caracas Company, which drove out foreign trade and eliminated the need for an annual subsidy from New Spain. Trade between Spain and the Americas did increase under chartered companies, but the success of the Caracas Company, which was created in 1728 and endured until 1784, was not repeated. Several companies never began trade after receiving charters. Even those that achieved early success fell apart by the century's final quarter, because of internal dissension, corruption, and the beginnings of intercolonial free trade introduced in 1765.
Roland D. Hussey, The Caracas Company, 1728–1784 (1934).
Jorge Pinto Rodríguez, "Los Cinco Gremios Mayores de Madrid y el comercio colonial en el siglo XVII," in Revista de Indias 51 (May-August 1991).
Carmelo Saenz De Santamaría, "La Compañía de Comercio de Honduras, 1714–1717" in Revista de Indias 40 (January-December 1980).
Arazola Corvera, Ma Jesús. Hombres, barcos y comercio de la ruta Cádiz-Buenos Aires, 1737–1757. Sevilla: Diputación de Sevilla, 1998.
Cavieres Figueroa, Eduardo. Servir al soberano sin detrimento del vasallo: El comercio hispano colonial y el sector mercantil de Santiago de Chile en el siglo XVIII. Valparaíso: Ediciones Universitarias de Valparaíso de la Universidad Católica de Valparaíso, 2003.
Fisher, John Robert. The Economic Aspects of Spanish Imperialism in America, 1492–1810. Liverpool, U.K.: Liverpool University Press, 1997.
Martínez Shaw, Carlos and José María Oliva Melgar. Sistema atlántico español: Siglos XVII-XIX. Madrid: Marcial Pons Historia, 2005.
Romano, Ruggiero. Mecanismo y elementos del sistema económico colonial americano, siglos XVI-XVIII. México: El Colegio de México, Fideicomiso Historia de las Américas: Fondo de Cultura Económica, 2003.
Vila Vilar, Enriqueta and Allan J. Kuethe. Relaciones de poder y comercio colonial: Nuevas perspectivas. Sevilla: Escuela de Estudios Hispano-Americanos: Texas Tech University, 1999.
Philippe L. Seiler
CHARTERED COMPANIES played an important part in the colonization of the New World, though they did not originate for that purpose. By the sixteenth century the joint-stock company already existed in many countries as an effective means of carrying on foreign trade, and when the New World attracted the interest of merchants, investors formed companies to engage in transatlantic trade. Since the manufacture or cultivation of many products required the transportation of laborers, colonization became a by-product of trade. The first English company to undertake successful colonization was the Virginia Company, first chartered in 1606 and authorized to operate on the Atlantic coast between thirty-four and forty-five degrees north latitude. Later charters to the London branch of the Virginia Company (1609 and 1612) and to the Council of New England (1620) enlarged and developed the original project. This method of sponsoring colonization predominated until the Puritan Revolution of the 1640s. The New foundland Company of 1610, the Bermuda Company of 1615 (an enlargement of an earlier project under the auspices of the Virginia Company), the Massachusetts Bay Company of 1629, and the Providence Island Company of 1630 represent the most important attempts at trade and colonization. After the Puritan Revolution, the lord proprietor superseded the trading company as preferred sponsor of colonization, and both king and colonists became increasingly distrustful of corporations. Massachusetts and Bermuda, the last of the charter companies in control of colonization, lost their charters in 1684, though the former had long since ceased to be commercial in character.
Andrews, K. R., et al., eds. The Westward Enterprise: English Activities in Ireland, the Atlantic, and America, 1480–1650. Detroit, Mich.: Wayne State University Press, 1979.
Cook, Jacob Ernest, et al., eds. Encyclopedia of the North American Colonies. New York: Scribners, 1993.
Viola F.Barnes/s. b.
chartered companies, associations for foreign trade, exploration, and colonization that came into existence with the formation of the European nation states and their overseas expansion. An association received its charter from the state and sometimes had state support. In the regulated company each member was an independent trader operating with his own capital and bound only by the general rules of the company charter. In the joint stock company the organization itself transacted the business, operating on the joint capital invested by members, each of whom shared proportionately in the profits and losses. The company received a monopoly of trade or colonization in a certain region and customarily exercised lawmaking, military, and treaty-making functions, subject to the approval of the home government, besides other privileges. The English Merchants Adventurers (1359) was more of a guild organization, but it foreshadowed such companies as England's Muscovy (1555), Levant (1581), East India (1600, perhaps the greatest of them all), Hudson's Bay (1670) and Holland's Dutch East India (1602). Such colonizing companies as the Virginia Company (1606), the Massachusetts Bay Company (1629), the French Royal West Indian Company (1664–74), the Santo Domingo Company (1698), and the Dutch West India Company (1621) were more quickly taken over by their governments. Later 19th-century colonizing and trading companies, such as the British North Borneo (1881), Royal Niger (1886), British South Africa (1888), and German East Africa (1884), did not last long and had more restricted powers, but attested to the continuing significance of the chartered company. In a technical sense, the modern corporation is a chartered company.
See G. Cawston, The Early Chartered Companies, 1296–1858 (1896, repr. 1968); R. Robert, Chartered Companies and their Role in the Development of Overseas Trade (1969).