ABSTRACT
Some 200 years ago, Adam Smith reported on a disastrous experiment in mercantilist statecraft. The great trading companies, he found, had been organized to conduct Great Britain's commerce in "remote and barbarous nations," and to maintain forts and garrisons for its protection. Chosen instruments to effectuate a public purpose, they were often given exclusive privileges and either had the right to exclude private adventurers ("interlopers") altogether, or to tax them in return for providing military and civil defense. These companies, Smith found, "have very seldom succeeded without an exclusive privilege: and frequently have not succeeded with one. Without an exclusive privilege, they have commonly mismanaged the trade. With an exclusive privilege, they have both mismanaged and confined it."
