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Updated February 11, 2023Composite investment strategies that relied on accumulating small parcels of goods and currency to establish commercially viable cargo financed early capital-intensive voyages. Cargoes were separated into shares to raise additional finance. Shipowners and merchants used several strategies to limit financial risks and make investments more attractive.
This became a popular way to fund voyages among multiple companies. Articles for the slave ship Sally, 1764, listing the names, duties, and wages of each crewman, confirm that Esek Hopkins, the brig’s master, was promised £50 per month, plus a “privilege”—a commission—of ten barrels of rum and ten enslaved Africans to sell on his own account. The crew included one “Negro boy,” Edward Abbie, understood to be Hopkins’s indentured servant.*
The EIC differed from other enterprises of its time by advancing from merely spending money (for the purchase of Indian goods) from which a profit was expected. Their “investments” put money and goods to another use. It is the transformational power of investment that changes one commodity into another commodity, then into a profit. This productive or “value-added” use of capital was used to drive profitability and provide a substantial return to the company’s investors.
According to Thomas Mun, a director of the EIC and author of texts including A Discourse of Trade from England unto the East-Indies and England’s Treasure by Forraign Trade, it was completely legitimate to procure produce from India at a low cost, transform those produce into English-owned goods, and then sell those “transformed” commodities in Europe at a significant profit to enrich the UK.
He wrote: “It is plain, that we make a far greater stock by gain upon these Indian Commodities, than those nations do where they grow, and to whom they properly appertain, being the natural wealth of their Countries. … Wares do not need to “properly appertain” (to belong as a possession) to England for them to represent (or “procure”) potential profits for England.”