Richard Melson

Richard Melson

July 2006

UK Board of Trade

UK Board of Trade

The Board of Trade circa 1808.

http://en.wikipedia.org/wiki/Board_of_Trade

The Board of Trade is a committee of the Privy Council of the United Kingdom, originating as a committee of inquiry in the 17th century and evolving gradually into a government department with a diverse range of functions. This department has been known as the Department of Trade and Industry since 1970, headed by a Secretary of State for Trade and Industry, who is also President of the Board of Trade. The full Board has met only once since the mid-19th Century, during commemorations of the bicentenary of the Board in 1986.

In 1621, King James I directed the Privy Council to establish a temporary committee to investigate the causes of a decline in trade and consequent financial difficulties. The Board's formal title remains The Lords of the Committee of Privy Council appointed for the consideration of all matters relating to Trade and Foreign Plantations.

In 1696, King William III appointed eight paid commissioners to promote trade in the American plantations and elsewhere.

The board carried on this work but also had long periods of inactivity, devolving into chaos after 1761 and abolished in 1782 by the Rockingham Whigs.

William Pitt recreated the committee in 1784, and an Order-in-Council of August 23, 1786 provided the formal basis that still remains in force. A secretariat was established which included the president, vice president and board members. After 1820 the board ceased to meet regularly and the business was carried out entirely by the secretariat.

In the 19th century the board had an advisory function on economic activity in the UK and its empire. During the second half of the 19th century it also dealt with legislation for patents, designs and trade marks, company regulation, labor and factories, merchant shipping, agriculture, transport, power etc. Colonial matters passed to the Colonial Office and other functions were devolved to newly created departments, a process that continued for much of the 20th century.

Reference

History of the Board of Trade

The Lords Commissioners of Trade and Foreign Plantations, appointed in 1696 and commonly known as the Board of Trade, did not constitute a committee of the Privy Council, but were, in fact, members of a separate body.

Although established by the King, the Board was abolished by an act of Parliament in 1782. The original commission appointed the seven (later eight) of the Great Officers of State, who were not required to attend meetings, and the eight paid members, who were required to attend. The Board, so constituted, had little real power, and matters related to trade and the colonies were usually within the jurisdiction of the Secretaries of State and the Privy Council, with the Board confining itself mainly to colonial administration.

Retrieved from "http://en.wikipedia.org/wiki/Board_of_Trade"

Investors in London’s first stock market boom

Anne L. Murphy University of Leicester alm17@le.ac.uk

http://www.ehs.org.uk/ehs/conference2006/assets/IIIAMurphy.doc

In 1687 there were fewer than fifteen English joint-stock companies. The shares of those companies were held in relatively few hands and were traded infrequently. Yet, by 1691 London’s stock market was booming.

The boom encompassed not just the well-established overseas trading companies like the East India and Royal African Companies, activity in one of the transient joint-stock companies of the early 1690s.

I

The Nine Years’ War (1689-1697) is often cited as the primary catalyst for the emergence of London’s stock market.

War restricted overseas trade and diverted funds, which might otherwise have been sent abroad, to domestic use. Merchants looking for outlets for their idle capital and talent became the chief supporters of the new financial market and often took on its broking and market-making functions. It is well-known that this costly war also provided the impetus for the creation of England’s first permanent funded long-term national debt. Nevertheless, a number of other factors should also be considered. Indeed, the increase in entrepreneurial endeavour during the late 1680s and early 1690s was equally the result of a developing economy that was reaping the rewards of the revolution in foreign trade that had occurred during the 1670s and 1680s, and exploiting the capital and skills of the Huguenot refugees who had flooded into England after the revocation of the Edict of Nantes in 1685.

Table 1: Annual numbers of stock transfers in the main trading companies, 1688-1698

Year	EIC*	RAC	HBC

1688	624	101	25
1689		82	26
1690		39	50
1691	3,139	930	149
1692		491	109
1693		391	85
1694	2,426	207	57
1695		194	54
1696		129	22
1697		195	19
1698	1,158	734	12

Source: IOR, L/AG/1/10/2; pp. 199-204; L/AG/14/3/2-4; PRO, T70/187-189; PRO BH 1/465.

* Few East India Company transfer books survive from this period and those records encompass no complete years. Thus, the above figures have been calculated by taking an average of the trades conducted in the known periods and multiplying them by 240 – the average number of trading days in a year. Thus, in 1691, 1,086 trades were conducted between 4 June and 19 September on 83 trading days – an average of 13.08 per day. Multiplying this figure by 240 trading days gives an estimated total for that year of 3,139 trades.

The decline of the stock market was attributed by Scott to the combination of the negative effects of the war on the economy, accumulating losses in shipping, and the constriction of trade and dislocation of credit that resulted from the poor state of the English coin and consequent recoinage of 1696 and 1697.

II

Given that London’s first stock market boom was typically brief and turbulent, it may be questioned how far it served to draw fresh capital from inexperienced investors into the market. Prior to 1688 there had been very few opportunities for joint-stock investment and, as shown in the following table, the companies whose shares were actively traded were held in relatively few hands.

Table 2: Main joint-stock companies of the period prior to 1688

Company	Date established	Date at which capital/no. of shareholders recorded	Nominal capital (£s)	No. of shareholders	Nominal value of each share


East India	1601	1688	739,782	511	£100
Royal African	1672	1688	111,100	203	£100
Hudson’s Bay	1668	1672	10,500	32	£100
White Paper	1686	1686	20,000	?	£50
Royal Lustring	1688	1692	60,000	134	£25

Source: India Office Records, L/AG/1/10/2, pp. 204-211; Davies, ‘Investment in Seventeenth Century’, p. 296; Scott, Constitution and Finance, III, pp. 471-475.

It has also been argued that, at this time, the majority of stock was in the hands of dominant social groups. With reference to the Royal African Company, Davies estimated that in 1675 one-fifth of the stock was owned by ‘courtiers, lawyers, widows, provincial aristocrats, esquires and gentlemen’ and found that much of the remaining stock was in the hands of merchants ‘most of whom may be taken as members of Gregory King’s class of "greater merchants and traders by sea"’. Moreover, Davies concluded that ‘a large part of the stock was in the hands of the top layer, rather than the middle or lower layers, of City society; men of aldermanic status or only just below it’. The East India Company did attract a greater diversity of shareholders. Yet, ‘the bulk of the [Company’s] capital was probably throughout the [seventeenth] century in the hands of City men’.

East India Company	108	7.22	Salt Petre	3	0.20
Royal African Company	52	3.48	Captain Poyntz's Engine	2	0.13
Company of Copper Miners	42	2.81	Royal Lustring Company	2	0.13
Blue Paper Company	20	1.34	Carving	1	0.07
Water Company	19	1.27	Glass Bottle Company	1	0.07
Bank of England	15	1.00	Pennsylvania	1	0.07

Source: PRO C114/165

It is also interesting to note that many contemporaries alleged that interest in the companies established during the early 1690s was chiefly speculative in nature.

Notably, the new Board of Trade set up in 1696 to examine the state of the English economy reported that both linen and paper manufacture had been hindered by the actions of stock-jobbers.

IV

Nevertheless, this market did attract new capital from a variety of sources. Moreover, it was a sophisticated market, which rapidly came to understand and utilise complex derivative instruments. The stock market boom, although typically short-lived, also laid the groundwork for the successful development of England’s first funded long-term National Debt. Indeed, the government, in its search for a method of funding the Nine Years’ War, was clearly responding to the innovations of the private market and taking advantage of the public interest that had been generated by the stock market boom.

Sources: Bank Archives, AC 28/32233, 28/1513-1522; AC27/382; IOR, L/AG/14/3/2-6; Subscription Book, New East India Company, A/1/54; PRO T70/187-198; HBC A43/1-2; C114/164-165; List of subscriptions to the Million Bank, C114/16.

** It was possible to subscribe to the Million Bank using cash, Million Adventure tickets and annuities. Thus, a subscription in either lottery tickets or annuities implies activity in the Bank itself and in those government debt instruments.

UK Board of Trade: 1696

July 10, 2006