The East India Men is the story of the multinational firm from the 1600’s to 1857, published by Time-Life, NY, 1980; the company operated out of England and started with involvement in the spice trade, evolved to trade with China and India. For many years the company controlled the state of India and the tea production from China for those in England love to drink tea; also the company was involved in the opium trade with China.

For a long time, the East India Company was the most profitable company in the world, however as time went on there were causes for the decline of the company in 1857. One aspect was the sailing fleet, the original plan was not to use capital to own the ships, they were contracted out. What was suppose to be a semi-open process for each ship, evolved to contracting out the same ships until the ship was put to rest. The process was called “hereditary bottom” and the syndicates became wealthy and continue to invest in each others ships. The ships decided the freight rates to charge and not surprisingly, the over charges were expensive to the East India Company. The company said little because the investors in the syndicates, while not Directors of the company, through various interlocking financial relationships were tightly linked to the Directors. Greed played a part, there were many other things going on it terms of directors fees and bonuses but as long as the 10.5% dividend was paid, few complained

Other things which happened around the 1850’s was The East India Company, a foreign private company effectively governed India, eventually the people tired of them and the India Mutiny happened. In addition, the industrial revolution allowed mills in England to manufacture cloth cheaper than India cloth which was one of the imports of the East India Company. The development of the steam engine lead to steamships for the passenger travel, for they were faster than the sailing ships of the East India Company. The Company was folded but not before the Government bought them out with the shareholders receiving a 10.5% dividend for 40 years on their shares.

Linking to dividend paying stocks, the East India was one of the first global corporation and for as long the age of the sail reigned, it was a powerful force in the English economy. It was also structured to fail, with only the wealthy benefiting from the ongoing operations and the government bailed it out (many in the upper house of Parliament had interests in the company). As a shareholder you would not necessarily complain, but 99.9% of the time, government bailouts does not happen. Greed is a force to be used to continue the company however it must be tempered with structures and innovations to remain on top of the heap, otherwise the company and dividend will not be existence.

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