Debt, the Bank of England, the East India Company were the only
examples of really large and safe investments at the opening of the
eighteenth century. Joint-ownership of large capitals for business
purposes made no great progress before the middle of the eighteenth
century, except in the case of chartered companies for foreign trade,
such as the East India Company, the Hudson's Bay Company, the Turkish,
Russian, Eastland, and African companies. Insurance business became a
favourite form of joint-stock speculation in the reign of George I.
The extraordinary burst of joint-stock enterprise culminating in the
downfall of the South Sea Company shows clearly the narrow limitations
for sound capitalist co-operation. Even foreign trade on joint-stock
lines could only be maintained successfully on condition that the
competition of private adventurers was precluded.

Joint-capital had yet made no inroad into manufacture, one of the
earliest instances being a company formed in 1764 with a capital of
L100,000 for manufacturing fine cambrics.[56]

The limits of co-operative capitalism at the opening of the period of
Industrial Revolution are indicated by Adam Smith in a passage of
striking significance:--"The only trades which it seems possible for a
joint-stock company to carry on successfully, without an exclusive
privilege, are those of which all the operations are capable of being
reduced to what is called a routine, or to such a uniformity of method
as admits of little or no variation. Of this kind is, first, the
banking trade; secondly, the trade of insurance from fire and from sea
risk and capture in time of war; thirdly, the trade of making and
maintaining a navigable cut or canal; and fourthly, the similar trade
of bringing water for the supply of a great city."[57]

In other words, the businesses amenable to joint-stock enterprise are
those where skilled management can be reduced to a minimum, and where
the scale of the business or the possession of a natural monopoly
limits or prohibits competition from outside.

FOOTNOTES:

[3] A. Smith, _Wealth of Nations_, Bk. iv., chap. i.

[4] Macpherson, _Annals of Commerce_, vol. ii. p. 728.

[5] Smith, _Memoirs_, vol. ii., chap. iii. As the approximate
calculation of a very competent business man these figures are more
reliable than the official figures of imports and exports, the value
of which throughout the eighteenth century is seriously impaired by
the fact that the