INDIES, French company of the. When France was obliged to get merchandise of the Indies from other nations, it was she who supplied the expenses of the foreign vessels that brought it. That is the consideration that led M. Colbert, whose genius turned principally toward commerce, to form in 1664 a Company of the West Indies , and another of the East Indies . For the establishment of the latter, the king gave more than six million of today’s money. The wealthy were invited to invest in it: the queens, princes, and the entire court supplied two million in their currency; the superior courts furnished twelve hundred thousand livres, the financiers two million, the league of merchants 650 thousand livres: in a word, the whole nation aided its master and Colbert.

At first this oriental company was held in the highest esteem, and the greatest success was anticipated; but the death of the most able directors sent to the Indies , the disloyalty of others, their divisions, M. Colbert’s mistake in entrusting the management more to financiers than to traders; the war of 1667 for the rights of the queen, which were nothing if not contestable; the war of 1672 against Holland, which Louis XIV wanted to destroy because it was rich and proud; the loss of the squadrons sent to the Indies in those times; finally, the wars that were ruinous for the nation from the beginning of the century until the peace of Utrecht, reduced things to such a state that what subsisted of that company, or rather those that were formed from its remains at various times up to 1719, were properly speaking no more than its shadow and skeleton.

Let us include among them the concession the company made of its trade and privileges in 1710 to rich traders in Saint Malo, who were charged for their trade with the East Indies on average ten percent of the total they made on the sale of merchandise they brought from there. This trade first languished in their hands, and was too weak to fill our needs. We had to buy from our neighbors most of the merchandise that came to Europe from the oriental countries, a servitude onerous to the state, from which Colbert had tried to free it.

In this same view, to profit from the great expenses that had been made for this purpose for 55 years, and not to leave such a fine design without effect, Mr. Law, the famous Scotsman to whom we owe the understanding of commerce, and who nevertheless was expelled from France and died in misery in Venice; Mr. Law, I say, who in May 1716 had established a general bank in France, and a trading company under the name of Western Company [ Compagnie d’occident ], with stocks, took the company of the Indies from the Malouins and again merged this company in May 1719 with the Western company. The new company was called the Company of the Indies . It is the one which subsists today, and is the last vestige remaining to us of Mr. Law’s noble system.

This merger soon made the old shares of the Western company, which were only at par, rise to 130 percent. With confidence growing, subscriptions rose in less than a month to over 50 million shares. By decree of 11 October 1719, the 50 million were pushed as far as 300 million. In a word, to make it short, there were seven stock issues amounting to 624 thousand, in truth, a prodigious number, but not one which would have been beyond the company’s strength if it had not promised a dividend of 200 livres per share, which was well beyond its power; and indeed the shares were themselves reduced to 200 thousand subsequently.

Meanwhile the credit of the Indies Company , supported by the progress of the royal bank, was so singular that in November 1719, people were extremely surprised to see the shares rise to 10,000 livres (twenty times more than their initial value) despite the company itself, which, to keep them from rising, issued 30 million in a single week without being able to bring them down.

Several causes, as we are going to assert following M. Dutôt, who has written on this subject a book admirable for its depth and insight, [1] contributed to this prodigious increase: (1) The union of the tobacco farm. [2] (2) That of the companies. (3) That of currencies and of refining. (4) That of the general farms. (5) That of the general revenues. (6) The failure to use the deniers coming from the reimbursements of annuities on the city and suppressed charges. (7) The loan of 2500 livres that the bank made on each share, assuming 2 percent interest per annum. (8) Finally, the profits made, and the desire to make profits, took things to this excess.

The Indies Company loaned 160 million to His Majesty to repay the same sum on the 2 billion 62 million 138 thousand livres of principal which the king owed on his accession to the throne. The company retained by his authorization on the revenues of His Majesty for the interest of his loan, 8 million, not including his benefice on the farms, on tobacco, on the currencies, and on its trade with the two Indies , so that his benefices could equal his receipts at the moment when the number of his shares was reduced to 200 thousand.

Meanwhile, the union of the bank with that company which, it seems, was supposed to serve them as mutual support, became, thanks to defiance, artifice, and avidity, the fatal endpoint where the decadence of both began. Bank notes fell into discredit, likewise the company’s stocks, on 10 October 1720, the time when the bank notes were suppressed and the credit of the state thrown into confusion. The bank failed completely, and the Indies Company was about to be drawn into its fall, if efforts had not been made from 1721 to 1725 to support the company. In said year 1725 in the month of June the king finally issued two edicts registered in the Parlement, one bearing confirmation of the privileges granted to said company during the previous years, and the other its relief from all its past operations.

These are the two principal edicts that fixed the state and trade of this company on its present footing. I shall not follow from then to today its prosperities, misfortunes, vicissitudes, problems, contradictions, borrowings, ameliorations, and those it may yet incur. None of that is within the purview of this work, and besides one could hardly state one’s view on this without the risk of displeasing.

I shall simply be content to observe that it was wrong that in the time of this company’s adversities its destruction was proposed, and the abolition of the Indies trade, as an establishment onerous to the state; the partisans of the former timid, ignorant, and restricted economy declaimed likewise in 1664, not reflecting that merchandise from the Indies , having become necessary, would be purchased more dearly from abroad. Second, if we send to the East Indies more specie than we bring back, the specie that comes from Peru and Mexico is the price of our goods taken to Cadiz. Third, we must also consider this trade with relation to the spices, drugs, and other things which it procures for us, which our provinces do not produce, which we cannot do without, and which we would be obliged to obtain from our neighbors. Fourth, given that the construction and equipping of our ships which go to fetch them take place within the realm, the money used for them does not leave: it employs people, it raises seamen, it is a great advantage for the state. Thus, far from this trade being onerous to France, we cannot protect and enlarge it too much. It does not destroy other branches of trade which have never been more flourishing. The quantity of vessels for America has almost tripled since the Regency. What other lights do we need to enlighten us? Fifth, finally, it is good policy to be able to be informed with certainty of everything that is taking place in the other parts of the world, because of the colonies which other nations have there, and this can be achieved only by trading there. The great Colbert was quite aware of these advantages, and the present government is more and more cognizant of the necessity and utility of this trade, since it is powerfully protecting it.

Let us conclude that as long as this company is supported and well-run, it will always itself find consumers for its returns, which we are already shipping to our neighbors. It has the proprietorship of Pondicherry, which assures the trade of the Coromandel and Bengal coasts, the islands of Bourbon and Mauritius, the quantity of capital and vessels necessary, and the representation of its stock here which gives it a second real, circulating, and free value, foundations perhaps equivalent to those of England’s India company , and sturdy colonies, even though much less extensive than those of Holland’s East India Company . Finally, its returns are very considerable, since they are going presently (1752) for over 24 million per annum.

1. Nicolas Dutot (1684–1741), Réflexions politiques sur les finances et le commerce (1735–1738). This book was quickly translated into English as Political Reflections upon the Finances and Commerce of France (London, 1739).

2. Ferme : the society of tax collectors for that commodity.