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Limited Liability

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The East India Company


Sunday, April 28, 2019

8:29 PM

The East India Company was formulated soon after the defeat of the Spanish Armada in 1588 when London Merchants became aware of the Spanish and Portuguese of the trading in the far east of the globe and pertiioned for permission to sail to the Indian Ocean and it became one of the first corporations with Limited Liability by virtue of Queen Elizabeth I Royal Charter in 1600.  The dominance of the company It lasted for two further centuries as one of the exporting trading companies, it also saw the creation of wars over territory, the colonisation of lands a new colonial master in the form of the United Kingdom which eventually took Governance of its lands while profiting from the abundance of itd resources and trading commodities;  it also however made world trading possible due to the limited liability which enshrined protection to the investors – this became crucial in the 19th Century development of transport structures such as the railway network in Britain and its then colonies.

Adam Smith though was critical of the Limited Liability model in his book the “Wealth of Nations” citing his concern over the management of investors’ money.

In 1770 a famine in Bengal wiped out a lot of the East India’s trade and British regulators saved it from bankruptcy from exempting it from tariffs of tea exports to the American colonies which eventually led to the Boston Tea Party tax opposition and which led to the American Revolution and the signing of the “Declaration of Independence” between  13 British colonies of the United States and Britain. A key player in the Declaration was John Adams who became the 2nd President of the United States and was a founding father of the US and met with King George III to petition for US independence from the United Kingdom.

The company was involved in a great many wars in it’s desire to win on trading including the Carnatic Wars,  a series of three military conflicts in the middle of the 18th century in India. The conflicts involved numerous nominally independent rulers and their vassals, struggles for succession and territory, and included a diplomatic and military struggle over the succession of power of the  Mughal Empire of India between the French East India Company and the British East India Company.

It also  saw the The Indian Rebellion of 1857 (also known as the Indian Mutiny or Sepoy Mutiny and under the  Government of India Act 1858, the British Government nationalised the company. The Crown took over its Indian possessions, its administrative powers and machinery, and its armed forces.

The companies HQ originally was in Leadenhall Street in London, and eventually moved to Crosby House, then Bishopsgate and later the area where Lloyds of London now stands.

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