Editing Corporation (section)

=== Mercantilism ===
{{See also|Mercantilism}}
Dutch and English chartered companies, such as the [[Dutch East India Company]] (also known by its Dutch initials: VOC) and the [[Hudson's Bay Company]], were created to lead the colonial ventures of European nations in the 17th century. Acting under a charter sanctioned by the Dutch government, the Dutch East India Company defeated [[Portugal|Portuguese]] forces and established itself in the [[Maluku Islands|Moluccan Islands]] in order to profit from the [[Europe]]an demand for [[spice]]s. Investors in the VOC were issued paper certificates as proof of share ownership, and were able to trade their shares on the original [[Amsterdam Stock Exchange]]. Shareholders were also explicitly granted [[limited liability]] in the company's royal charter.<ref>{{cite book |first=Om |last=Prakash |title=European Commercial Enterprise in Pre-Colonial India |publisher=Cambridge University Press |location=Cambridge |date=1998}}</ref>

In England, the government created corporations under a [[royal charter]] or an [[Act of Parliament]] with the grant of a [[monopoly]] over a specified territory. The best-known example, established in 1600, was the [[East India Company]] of [[London]]. [[Elizabeth I of England|Queen Elizabeth I]] granted it the exclusive right to trade with all countries to the east of the [[Cape of Good Hope]]. Some corporations at this time would act on the government's behalf, bringing in revenue from its exploits abroad. Subsequently, the company became [[company rule in India|increasingly integrated]] with English and later British military and colonial policy, just as most corporations were essentially dependent on the [[Royal Navy]]'s ability to control trade routes.

Labeled by both contemporaries and historians as "the grandest society of merchants in the universe", the English East India Company would come to symbolize the dazzlingly rich potential of the corporation, as well as new methods of business that could be both brutal and exploitative.<ref>{{cite book |first=John |last=Keay |title=The Honorable Company: A History of the English East India Company |publisher=MacMillan |location=New York |date=1991}}</ref> On 31 December 1600, Queen Elizabeth I granted the company a 15-year monopoly on trade to and from the [[East Indies]] and [[Africa]].<ref>{{cite web|url=http://web.utk.edu/~gerard/romanticpolitics/britisheastindia.html |title=British East India Company |first1=Gerard |last1=Cohen-Vrignaud |first2=Stephanie |last2=Metz |first3=Jody |last3=Dunville |first4=Shannon |last4=Heath |first5=Julia P. |last5=McLeod |first6=Kat |last6=Powell |first7=Brent |last7=Robida |first8=John |last8=Stromski |first9=Brandon |last9=Haynes|access-date=19 January 2017 |archive-url=https://web.archive.org/web/20161220082932/http://web.utk.edu/~gerard/romanticpolitics/britisheastindia.html |archive-date=20 December 2016 |url-status=dead}}</ref> By 1711, shareholders in the East India Company were earning a [[return on investment|return on their investment]] of almost 150 per cent. Subsequent stock offerings demonstrated just how lucrative the company had become. Its first stock offering in 1713–1716 raised £418,000, its second in 1717–1722 raised £1.6&nbsp;million.<ref>''Ibid.'' at p. 113{{Full citation needed|date=August 2020}}</ref>

A similar [[chartered company]], the [[South Sea Company]], was established in 1711 to trade in the Spanish South American colonies, but met with less success. The South Sea Company's monopoly rights were supposedly backed by the [[Treaty of Utrecht]], signed in 1713 as a settlement following the [[War of the Spanish Succession]], which gave [[Kingdom of Great Britain|Great Britain]] an ''[[asiento]]'' to trade in the region for thirty years. In fact, the Spanish remained hostile and let only one ship a year enter. Unaware of the problems, investors in Britain, enticed by extravagant promises of profit from [[Corporate promoter|company promoters]] bought thousands of shares. By 1717, the South Sea Company was so wealthy (still having done no real business) that it assumed the [[government debt|public debt]] of the British government. This accelerated the inflation of the share price further, as did the [[Bubble Act|Bubble Act 1720]], which (possibly with the motive of protecting the South Sea Company from competition) prohibited the establishment of any companies without a royal charter. The share price rose so rapidly that people began buying shares merely in order to sell them at a higher price, which in turn led to higher share prices. This was the first [[economic bubble|speculative bubble]] the country had seen, but by the end of 1720, the bubble had "burst", and the share price sank from £1,000 to under £100. As bankruptcies and recriminations ricocheted through government and high society, the mood against corporations and errant directors was bitter.

[[File:South-sea-bubble-chart.png|thumb|right|Chart of the [[South Sea Company]]'s stock prices. The rapid inflation of the stock value in the 1710s led to the [[Bubble Act|Bubble Act 1720]], which restricted the establishment of companies without a [[royal charter]].]]

In the late 18th century, [[Stewart Kyd]], the author of the first treatise on [[corporate law]] in English, defined a corporation as:

{{blockquote|a collection of many individuals united into one body, under a special denomination, having [[perpetual succession]] under an artificial form, and vested, by the policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation or at any subsequent period of its existence.|A Treatise on the Law of Corporations, Stewart Kyd (1793–1794)}}