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the rising pools of wealth and capital in Europe spawned a set of important institutional changes

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had a profound effect on the organization of global market places

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gave birth to merchant trading companies

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The Muscovy Company (1555-1917)

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first major chartered joint stock company

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monopoly on trade between England and Muscovy (principality centered around Moscow) until 1698

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since 1917 the company has operated as a charity, now working within Russia

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The Levant Company (1581-)

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formed in 1581

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regulated trade with Turkey and the Levant

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several London merchants petitioned Queen Elizabeth I in 1580 for a charter to guarantee exclusivity when trading in that region

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had no colonial aspirations

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established "factories" (trading centers) in already-established commercial centers

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set up to enjoy a monopoly trading position

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Francis Levett (1700-1764)

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head of company

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posed in pictures as "going native", wearing the Turkish dress

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merchants brokered between cultures and knew various cultures well

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played with the idea that they belonged to multiple worlds

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felt they were bringing the world together

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The Massachusetts Bay Company (1629-)

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chartered by the English crown to colonize a vast area in New England

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quickly taken over by a group of Puritans, under the leadership of John Winthrop

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center at Boston

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The Royal African Company (1660-)

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granted a monopoly over English trade with West Africa

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original purpose was to exploit the gold fields up the Gambia River

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but it was soon engaged in the slave trade as well as with other commodities

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The South Sea Company (1711-)

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also granted a monopoly to trade with South America

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created as a public–private partnership to consolidate and reduce the cost of national debt

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Britain was involved in the War of the Spanish Succession and Spain controlled South America, there was no realistic prospect that trade would take place and the company never realized any significant profit from its monopoly

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merchant trading companies

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significant was: these were no longer just individuals

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English firms

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also analogues for France, Portugal, Dutch and Spanish

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origins of these companies

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charters granted by monarchs giving them trade monopolies in certain geographical areas

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relationship between companies and monarchs

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there was a deal being struck

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institutional foundation for an intensification of a global division of labor

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governments and merchants going to the next level in six easy steps

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1. fiscal military state

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merchants acquire from governments monopoly rights to trade

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protects their earnings

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merchants reciprocate a certain share of their profits to the state in the form of revenue

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as trade increases, pool of activity grows, creates more capital

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capital can go to the purchase of government bonds

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government uses bonds to buy weapons, expands their military capacity that depends the monopoly rights of their trading companies

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this will have a profound implication for global power

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companies get involved in colonization schemes

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companies get rights not just to trade but to create colonies, which will produce commodities for other people's consumption

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wealth becomes increasingly privatized

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described by economists in 18th century

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mercantilism: underpinning philosophy and practice for the new model of an empire that was already very different than the predator systems of the early 16th century