Recently read a book called Merchant Kings by Stephen Brown, Douglas & McIntyre, Vancouver, 2009. In the book, Mr. Brown outlines the individuals that ran country related trading firms which were owned by investors, the wealthiest members of the country, but also were backed by the resources of the host country. The 6 trading companies outlined are the Dutch East India Company, The English East India Company, The Dutch West Indies Company, the Russian American Company, the Hudson’s Bay Company, and the British South Africa Company. Similar to all private trading companies, the aim of the company is to make a profit for the shareholders and pay a healthy dividend. The easiest method to do this was to control a monopoly or be a monopoly like business. Along the way for the all these companies, decisions were made to use the native population as serfs – to do the cultivation of resources so the trading companies could resell in Europe at a very high markup.

In the north, the Russians had discovered Bering Sea and the rich animal life in the north which lead to a Moscow backed company was set up to trade in animal skins including Sea Otter. Alexsandr Baranov ran the operations in what is now known as Alaska and quickly realized the best method to operate was to have a monopoly thus ensuring prices remained high and inventory of animals remained sustainable. When Mr. Baranov first arrived there was hundreds of thousands of sea otters, it did not take long to reduce the numbers significantly for other competitors and countries were discovering the north. As time went on the Russian America Company expanded to have operations from Alaska to California primarily focused on sea otters with headquarters in Sitka, Alaska. After Mr. Baranov left the leadership, the company’s fortunes declined and eventually the company lands were sold to the US in the Alaska purchase.

In what is now know as Canada, the King gave ownership to all the lands that drained into Hudson’s Bay which turnout to be most of Canada, to the Hudson Bay Trading Company. The interest was a rival French company sending beaver pelts to Europe. The beaver felt was used in hat making and at the time the fashion of the day was for everyone to wear a hat. Some of the hats were passed down from one generation to the next. Fortunately for the Hudson Bay Company the lands they were given by the King were rich in beavers. The person in charge of the operation was Sir George Simpson who had merged the competitors to strengthen the company and have a monopoly. Mr. Simpson ruled the land as a baron, however his primary concern was fur trading and fur trading conflicts with people, so he did not want too much population in the region. The country of England decided to send its people including convicts, orphans, and offers of free land to citizens to Australia and Canada. Much of the lands of Rupert’s Land became provinces of Canada with Hudson Bay moving into retail stores and another part cultivated mineral resources.

In Africa, Cecil Rhodes made his money consolidating the diamond mines in South Africa and then controlling the gold mines in order to keep prices high or the minimum stable. You may have heard about Rhodes Scholars, DeBeers diamonds, Consolidated Gold Fields, the country of Rhodesia these were all done by Cecil Rhodes. He started with diamond mines owning a mine and reinvesting the profits. As time went on, greater capital was needed to mine the diamonds and the company DeBeers was formed and soon it was a leading firm and paying dividends of 25%. Mr. Rhodes wished to monopolize the diamond trade and did a unfriendly merger with the help of European financing. Soon gold was discovered in the Rand in South Africa and Mr. Rhodes used a similar process with Consolidated Gold Fields. For all his power in business, he believed in the superiority of white Anglo Saxons particularly the British Empire thus his companies operations would have fit easily into the apartheid system that would develop in South Africa.

Linking to dividend paying stocks, people for hundreds of thousands of years have been trading goods and services and in the 1600’s much of the world was influenced by company trading companies. The goal was to go to lands bring back goods and sell them at a higher price and pay dividends to the shareholders. 300 or 400 years ago, much was taken by force, ideally there is change today or at least we hope there is. Looking back at the 6 companies which ruled parts of their world, all but one went out of business which means it is still a hard job to maintain a profitable dividend company over the years.

There are more questions than answers, till the next time – to raising questions