Page:Harvard Law Review Volume 2.djvu/130

 112 HARVARD LAW REVIEW.

two hundred companies formed about the year 1720, for the prosecution of every kind of enterprise, including one for the "Insurance and Improvement of Children's Fortunes/' and an- other for "Making Salt Water Fresh." With very few exceptions, these companies were not incorporated, and in 1720 writs of scire facias were issued,^ directing an inquiry as to their right to carry on business, in usurpation of corporate powers. This put a sudden end to many of these unfortunate ventures, and the consequent collapse of the enormously inflated public credit carried down others, so that only four of the long list were still in existence when Anderson wrote, — the York Buildings Company, the two Assurance Companies mentioned above, and the English Copper Company. The speculation in shares had been too g^eat and the expectations of profit too ex- travagant not to cause a correspondingly g^eat distrust in corporate enterprises when the bubble burst, and the profits realized were found to be small and extremely variable. Adam Smith, writing in 1776, was of opinion,^ that "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 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." To render the establishment of a joint stock reason- able, however, the author says, two other circumstances should concur : first, " that the undertaking is of greater and more general utility than the greater part of common trades; and, secondly, that it requires a greater capital than can easily be collected into a private copartnery."

But during the latter part of the eighteenth century corpora- tions were gradually increasing in number and importance. The need for them was felt in establishing canals, water-works, and, to some extent in conducting the growing manufactures of the king- dom. The progress was indeed slow, and was destined to be so until the introduction of gas-lighting into all the larger cities and

1 And. Hist. Com., Vol. ii. 296.

3 Wealth of Nations, book v. ch. i. art. 5.