Skip to main content

Economy Lessons - Joint-Stock Companies


Some interesting ideas from the Wealth of Nations by Adam Smith regarding big capital:

"The trade of a joint-stock company is always managed by a court of directors. This court, indeed, is frequently subject, in many respects, to the control of a general court of proprietors. But the greater part of these proprietors seldom pretend to understand any thing of the business of the company; and when the spirit of faction happens not to prevail among them, give themselves no trouble about it, but receive contentedly such halfyearly or yearly dividend as the directors think proper to make to them."

"The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company. It is upon this account, that joint-stock companies for foreign trade have seldom been able to maintain the competition against private adventurers. They have, accordingly, very seldom succeeded without an exclusive privilege; and frequently have not succeeded with one. Without an exclusive privilege, they have commonly mismanaged the trade. With an exclusive privilege, they have both mismanaged and confined it."

And one of the examples:

"The Royal African company soon found that they could not maintain the competition against private adventurers, whom, notwithstanding the declaration of rights, they continued for some time to call interlopers, and to persecute as such. In 1698, however, the private adventurers were subjected to a duty of ten per cent. upon almost all the different branches of their trade, to be employed by the company in the maintenance of their forts and garrisons. But, notwithstanding this heavy tax, the company were still unable to maintain the competition. Their stock and credit gradually declined."

Comments

Popular posts from this blog

Energy Business Case - Coal Mine in West Virginia

Situation Coal in Africa: An opportunity is available to invest in a coal mine in West Virginia. The mine’s value is less than in past years because of actual and anticipated restrictions on coal-fired power generation in the United States. However, the mine has a chance to sell its coal on contract to a public utility in West Africa. The utility is working through the World Bank for financing to build a number of coal-fired power plants. If they obtain World Bank financing, then a customer for the coal mine is assured, at least for the duration of the contracts. The power plants will employ the best current technology for burning coal, which exceeds all current air quality standards for the region. However, the power plants will not be designed to attempt carbon capture. The area of Africa the plants will serve suffers from extreme energy poverty, with some of the lowest per capita energy consumption in the world.

Overview of the Region West Africa is the westernmost region …

Energy Market Analysis - Coal Reserves for Decade Ending 2012 and Price Forecast

According to the British Petroleum Statistical Review of World Energy, 2013, global coal reserves declined in the decade ending 2012:

Figure 1. Proved coal reserves.

Proved reserves of coal are generally taken to be those quantities that geological and engineering information indicates with reasonable certainly can be recovered in the future from known deposits under existing economic and operating conditions.

If we look at supply and demand factors in the decline, we can see that:

a) Coal price has grown significantly in the decade ending 20121:


  Figure 2. Prices in US Dollars per tonne.

b) Coal consumption has also grown significantly worldwide2:


Figure 3. Coal consumption by region.

c) The price of substitutes (i.e. Natural Gas) has also grown. Not so in North America though, but if we look at the world trend it is growing3:


Figure 4. Natural gas prices.

Therefore if the rule of supply and demand worked we would see increase in proved reserves for coal, because increase in dem…

Wine - Castello del Poggio Moscato Provincia di Pavia

Awesome wine. Sweet with notes of pear, caramel, apricot.


Some details