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THE SOCIAL NETWORKS OF INVESTMENT IN EARLY MODERN ENGLAND

Published online by Cambridge University Press:  21 October 2020

EDMOND SMITH Open the ORCID record for EDMOND SMITH [Opens in a new window]
EDMOND SMITH*
Affiliation:
University of Manchester
*
University of Manchester, Samuel Alexander Building, Oxford Road, Manchester, United Kingdom, M13 9PLedmond.smith@manchester.ac.uk
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Abstract

The launch of the East India Company in 1599 relied on the engagement of an investing public. Despite this, little is known about how and why ordinary individual investors chose to invest in the corporation or what institutional frameworks supported them. While the later ‘financial revolution’ would radically alter the relationship between the state, investors, and financial organizations, this process does not adequately explain the earlier development of an investing public. Using a newly developed dataset of members’ familial, neighbourhood, civic, and business connections, this article reconstructs the social networks of East India Company investors in 1599. This analysis reveals that the company was formulated within an intensely interconnected investment environment – linkages that were used to distribute information and provide access to seemingly illiquid markets. Social networks played a key role in how people decided about where, when, with whom, and how much to invest during the expansion of investment opportunities in early modern England.

Type
Article
Information
The Historical Journal , Volume 64 , Issue 4 , September 2021 , pp. 912 - 939
Copyright
Copyright © The Author(s), 2020. Published by Cambridge University Press

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Footnotes

*

I would like to thank Catia Antunes, D'Maris Coffman, Misha Ewen, William O'Reilly, William Pettigrew, Phil Stern, Phil Withington, the convenors and members of the IHR Economic and Social History Workshop and Cambridge Financial History Workshop, and two anonymous reviewers for their very helpful suggestions.

References

1 Rabb's, Theodore Enterprise and empire: merchant and gentry investment in the expansion of England, 1575–1630 (Cambridge, MA, 1967)CrossRefGoogle Scholar provides a detailed assessment of the challenges in tracing these investments. For studies of the EIC, see Chaudhuri, Kirti N., The English East India Company: the study of an early joint-stock company (London, 1964)Google Scholar; Keay, John, The honourable company: a history of the English East India Company (New York, NY, 1991)Google Scholar; Stern, Philip, The company-state: corporate sovereignty and the early modern foundation of the British empire in India (Oxford, 2011)CrossRefGoogle Scholar.

2 These records are detailed below in notes 30, 37, 53, and 58.

3 Importantly, this allows for successful institutional arrangements that underpinned investors’ decision-making despite limited state involvement in their enforcement. For state-driven institutional change, see North, Douglas and Weingast, Barry, ‘Constitutions and commitment: the evolution of institutions in governing public choice in seventeenth-century England’, Journal of Economic History, 49 (1989), pp. 803–32CrossRefGoogle Scholar.

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5 English merchants had access to an array of information, including accounts drawn from Portuguese, Dutch, and English travellers in the region. See Hackel, Heidi and Mancall, Peter, ‘Richard Hakluyt the younger's notes for the East India Company in 1601: a transcription of the Huntington Library Manuscript EL 2360’, Huntington Library Quarterly, 67 (2004), pp. 423–36CrossRefGoogle Scholar.

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7 For the range of ideological incentives for participation, see Armitage, David, Ideological origins of the British empire (Cambridge, 2000)CrossRefGoogle Scholar.

8 Willian's, T. S. The Muscovy merchants of 1555 (Manchester, 1953)Google Scholar remains the most successful interrogation of such an investor community.

9 Only minimal connection is explored, for example, in Canny, Nicholas, ed., The origins of empire: British overseas enterprise to the close of the seventeenth century (Oxford, 1998)Google Scholar; Bowen, Huw, Mancke, Elizabeth, and Reid, John G., eds., Britain's oceanic empire: Atlantic and Indian Ocean worlds, c. 1550–1850 (Cambridge, 2013)Google Scholar; Roper, L. H., Advancing empire: English interests and overseas expansion, 1613–1688 (Cambridge, 2017)CrossRefGoogle Scholar.

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20 The contemporaneous Dutch East India Company (VOC) has been recognized as a precursor to developments in public finance. See Gelderblom, Oscar and Jonker, Joost, ‘Completing a financial revolution: the finance of the Dutch East India trade and the rise of the Amsterdam capital market’, Journal of Economic History, 64 (2004), pp. 641–72CrossRefGoogle Scholar.

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23 The roots of these developments have been traced in the medieval period, especially in northern Italy, and reached a high-level of maturity in the United Provinces around 1600. See Boone, M., Davids, K., and Janssens, P., Urban public debts: urban government and the market for annuities in western Europe (14th–18th centuries) (Turnhout, 2003)CrossRefGoogle Scholar; Epstein, Stefan, Freedom and growth: the rise of states and markets in Europe, 1300–1750 (London, 2000)CrossRefGoogle Scholar; Munro, John H., ‘The medieval origins of the financial revolution: usury, rentes, and negotiability’, International History Review, 25 (2003), pp. 505–62CrossRefGoogle Scholar.

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25 These companies did not necessarily operate on a joint-stock basis. Many so-called ‘regulated companies’ required investment in the form of membership fees, which enabled participants to independently or collaboratively fund specific voyages under the regulation, but not the direction, of the corporation. See Pettigrew, William and Stein, Tristan, ‘The public rivalry between regulated and joint stock corporations and the development of seventeenth-century corporate constitutions’, Historical Research, 90 (2017), pp. 341–62CrossRefGoogle Scholar. For the Muscovy Company, see Willan, T. S., The early history of the Russia Company, 1553–1603 (Manchester, 1956)Google Scholar; for the Turkey Company, see Wood, Alfred, A history of the Levant Company (London, 1964)Google Scholar; for the Spanish Company, see Croft, Pauline, The Spanish Company (London, 1973)Google Scholar.

26 London, British Library (BL), India Office Records (IOR)/B/1, 22 Sept. 1599.

27 BL, IOR/A/2, 31 Dec. 1600.

28 Investors in the EIC were known as ‘members’, ‘brothers’, ‘venturers’, or ‘subscribers’, but ‘investors’ and ‘investment’ are used here for the sake of consistency. For the changing meaning of these terms, see Forman, Valerie, ‘Transformations of value and the production of “investment” in the early history of the East India Company’, Journal of Medieval and Early Modern Studies, 34 (2004), pp. 611–41CrossRefGoogle Scholar.

29 BL, IOR/B/1, 22 Sept. 1599.

30 To put this into perspective, £9 a year rented William Garraway a sumptuous property on Lothbury Street in London (London, Drapers’ Company archives, renter wardens’ accounts, 1599–1630); £30 allowed the Mercers’ Company to host the lord mayor and sheriffs of London for dinner (London, Mercers’ Company archives, acts of court, 1595–1629, fos. 26–7); and it cost £4,000 to buy an 800-ton ship (BL, IOR/B/2, Aug. 1607).

31 Brenner has described the EIC as a highly exclusive enterprise with its members’ social make-up having more in common with the twelve-man Turkey Company (formed in 1581) than with more open ventures like the Spanish Company (1604) and Virginia Company (1606), which both attracted more than 500 members. Brenner, Merchants and revolution, pp. 61–3.

32 Although even £100 was a lot more than the membership fees and investment common in other corporations during this period. See Smith, Edmond, ‘The global interests of London's commercial community, 1599–1625: investment in the East India Company’, Economic History Review, 71 (2018), pp. 1118–46CrossRefGoogle Scholar.

33 BL, IOR/B/1, 22 Sept. 1599.

34 All Hallows, Bread Street and St John the Evangelist parish register, London Metropolitan Archives (LMA), P69/BEN2/A/001/MS05671.

35 BL, IOR/B/1, 24 Sept. 1599. For privateering, see Andrews, Kenneth, Elizabethan privateering: English privateering during the Spanish War, 1585–1603 (London, 1964)Google Scholar.

36 With the Merchant Adventurers’ trade declining, the EIC was presented as a means for accessing new markets for woollen cloth. See Supple, E., Commercial crisis and change in England, 1600–1642 (Cambridge, 1959)Google Scholar. For the Merchant Adventurers, see Bisson, Douglas, The Merchant Adventurers of England: the company and the crown, 1474–1564 (Newark, DE, 1993)Google Scholar; Leng, Thomas, Fellowship and freedom: the Merchant Adventurers and the restructuring of English commerce, 1582–1700 (Oxford, 2020)CrossRefGoogle Scholar.

37 Building on data detailed in note 30 above, information regarding parish and familial relationships has been drawn from parish registers (LMA, P69, all parishes) and probate records (London, The National Archives (TNA), PCC/PROB/11, 99, 103, 105, 114, 132, 134, 137, 158, 160). For prominent investors, the Oxford Dictionary of National Biography (ONDB) contains additional information.

38 Grassby, Richard, Kinship and capitalism: marriage, family, and business in the English-speaking world, 1580–1740 (Cambridge, 2001), pp. 391–417Google Scholar.

39 Belief in an individual's competence can increase willingness to invest – even when it runs counter to other available evidence. See John Graham, Campbell Harvey, and Hai Huang, ‘Investor competence, trading frequency and home bias’, Management Science, 55 (2009), pp. 1094–1106.

40 BL, IOR/B/1, 22 Sept. 1599.

41 The Mercers and Merchant Adventurers also had long-standing links. See Sutton, Anne, ‘The Merchant Adventurers of England: their origins and the Mercers’ Company of London’, Historical Research, 75 (2002), pp. 25–46CrossRefGoogle Scholar.

42 Grassby, Kinship and capitalism.

43 St Dunstan in the West parish register, LMA, P69/OLA2/A/002/MS04400; St Helen Bishopsgate parish register, LMA, P69/HEL/A/002/MS06831.

44 For the Barbary Company, see Willan, T. S., Studies in Elizabethan foreign trade (Manchester, 1959)Google Scholar.

45 Richard and his wife, Susannah, had seven sons and nine daughters, who were probably the only female investors in the EIC at this point. However, for women's participation more widely in corporate activity, see Froide, Amy, Silent partners: women as public investors during Britain's financial revolution, 1690–1750 (Oxford, 2016)CrossRefGoogle Scholar; Ewen, Misha, ‘Women investors in the Virginia Company in the early seventeenth century’, Historical Journal, 62 (2019), pp. 853–74CrossRefGoogle Scholar.

46 St Dunstan in the East parish register, LMA, P69/DUN1/A/001/MS07857.

47 St Botolph Bishopsgate parish register, LMA, P69/BOT4/A/001/MS04515; Ian Archer, ‘Saltonstall, Sir Richard (1521?–1601)’, ODNB, http://www.oxforddnb.com/view/article/24580.

48 Networks in this article were created using Gephi and employed ‘Force Atlas’ modelling, drawing on Vincent Blondel, Jean-Loup Guillaume, Renaud Lambiotte, and Etienne Lefebvre, ‘Fast unfolding of communities in large networks’, Journal of Statistical Mechanics: Theory and Experiment (2008), P10008, https://doi.org/10.1088/1742-5468/2008/10/P10008; Lambiotte, Renaud, Delvenne, J.-C., and Barahona, M., ‘Laplacian dynamics and multiscale modular structure in networks’, IEEE Transactions of Network Science and Engineering, 1 (2015), pp. 76–90CrossRefGoogle Scholar. For a practical guide for how this methodology can be applied, see Edmond Smith, ‘Networks of the East India Company, c. 1600–1625’ (Ph.D. thesis, Cambridge, 2016), pp. 15–29.

49 Harding, Vanessa, ‘Recent perspectives on early modern London’, Historical Journal, 47 (2004), pp. 435–50CrossRefGoogle Scholar.

50 This map is based on maps in London Record Society, London inhabitants within the walls, 1695 (London, 1966), available at http://www.british-history.ac.uk/london-record-soc/vol2/introduction.

51 Stow, John, A survey of London: reprinted from the text of 1603, ed. Kingsford, C. L. (Oxford, 1908), pp. 129–38Google Scholar.

52 Drapers’ Company archives, renter wardens’ accounts, 1599–1630, 6/26; Mercers’ Company archives, renter wardens’ accounts, 1577–1603.

53 Building on data detailed in notes 30 and 37, additional information regarding the livery company affiliations of EIC members has been taken from Records of London's livery companies online, a database of membership information for the City of London's livery companies, http://www.londonroll.org/search. It includes the records of the Clothworkers’, Drapers’, Goldsmiths’, Mercers’, Bowyers’, Girdlers’, Salters’, Musicians’, and Tallow Chandlers’ livery companies. Finally, for senior civic positions held by EIC members, see LMA, COL/CA/01/03; B. Beaven, ed., The aldermen of the City of London (2 vols., London, 1908–13); Cockayne, G. E., Some account of the lord mayors and sheriffs of London, 1601–1625 (London, 1897)Google Scholar.

54 For an overview of the structure of London's livery companies, see Unwin, George, The gilds and companies of London (London, 1963)Google Scholar.

55 Scott, Constitution and finance, pp. ix, 1–7.

56 Barkan, Joshua, Corporate sovereignty: law and government under capitalism (Minneapolis, MN, 2013)CrossRefGoogle Scholar; Withington, Phil, ‘Public discourse, corporate citizenship, and state formation in early modern England’, American Historical Review, 112 (2007), pp. 1016–38CrossRefGoogle Scholar.

57 In all graphs relating to the livery companies, the companies are ordered along the x-axis in the order of precedence (based on prestige, size, and wealth) established by the City of London in 1515.

58 Building on data detailed in notes 30, 37, and 53, information regarding business activities of EIC members has been drawn from a number of sources. For various ventures: TNA, SP/12, SP/14, CO/77; Carr, T., ed., Select charters of trading companies, 1530–1707 (London, 1913)Google Scholar; HMSO, Calendar of the Cecil papers in Hatfield House, vols. 10–21 (London, 1883–1906); Sainsbury, William Noel, ed., Calendar of state papers, colonial, America and West Indies, vol. 1: 1574–1660 (London, 1860)Google Scholar; idem, Calendar of state papers, colonial series, East Indies, China and Japan, vols. 2–6 (London, 1864–78). For the Levant Company: charter in Hakluyt, Richard, ed., The principall navigations (London, 1598–1600), pp. 73–92Google Scholar; TNA, SP/12/12–13, 41–4, 140, 239, 241; TNA, SP/105, 110, 143, 147–8; BL, Cotton MS, Nero B 8–11; TNA, C66/1224, fo. 17. Barbary Company: BL, Add MS 30567. Exploratory ventures: Martin Frobisher, The three voyages of Martin Frobisher, in search of a passage to Cathaia and India by the north-west, 1576–8, ed. Richard Collinson (London, 1867); TNA, SP/12/1, 20, 34, 124, 126, 226; BL, Cotton MS, Otho 8. Muscovy Company: charter in Hakluyt, Principall navigations, pp. 304–16; BL, Lansdowne MS 142, fo. 301; BL, Add MS 30671; BL, Sloane MS 1543; LMA, CLC/BN/195/1; BL, Lansdowne MS 142, fos. 30 and 69; TNA, SP/91/2; TNA, C66/1992, fo. 5. Spanish Company: BL, Add MS 9365; BL, Lansdowne MSS 3, 13, 60, 86, 487; TNA, SP/14/12–14; TNA, C66/1158, fo. 49. Further data, particularly in relation to Merchant Adventurers and privateering, is drawn from appendices in Rabb, Enterprise and empire, and Andrews, Elizabethan privateering.

59 For how investors make strategic choices, see Arping, Stefan and Falconieri, Sonia, ‘Strategic versus financial investors: the role of strategic objectives in financial contracting’, Oxford Economic Papers, 62 (2010), pp. 691–714CrossRefGoogle Scholar.

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61 Stern, Company-state, p. 6.

62 Ibid., p. 130.

63 Gelderblom, Oscar, Cities of commerce: the institutional foundations of international trade in the Low Countries, 1250–1650 (Princeton, NJ, 2013), p. 3Google Scholar.

64 For the role of directors, see Renée Adams, Benjamin Hermalin, and Michael Weisbach, ‘The role of boards of directors in corporate governance: a conceptual framework and study’, NBER Working Paper Series no. 14486 (2008); Aske Brock, ‘The company director: commerce, state and society’ (Ph.D. thesis, Kent, 2017).

65 BL. IOR/B/1, 24 Sept. 1599.

66 For the effect of different forms of relationship on social networks, see Anheier, Helmut, Gerhards, Jürgen, and Romo, Frank, ‘Forms of capital and social structure in cultural fields: examining Bordieu's social topography’, American Journal of Sociology, 100 (1995), pp. 859–903CrossRefGoogle Scholar. For the influence of neighbours, see Bala, Venkatesh and Goyal, Sanjeev, ‘Learning from neighbours’, Review of Economic Studies, 65 (1998), pp. 595–612CrossRefGoogle Scholar.