Compagnie Des Indes: Governance and Bailout

Abstract:     
The French Company of the Indies (Compagnie des Indes), has unfortunately been understudied by historians, let alone by lawyers and economists. Part of the reason for this lacuna is that the companies archives have been lost. This is regrettable, since the story of the company, whose trading privilege was granted by Colbert in 1664 only to be suspended 1769 after a polemical battle for survival, presents an enormously fascinating human saga. One might profitably focus on the colorful characters such as Necker or Dupleix, or the macroeconomic imbalances engendered by mercantilist policies. Here, however, I focus on the lessons that the company might hold for contemporary debates about corporate governance and the role of government in private enterprise.

I argue that there are striking parallels between the powerlessness of the company’s shareholders and shareholders in today’s large corporations, along with a similar eerie ambivalence about the role government should play vis-à-vis troubled enterprises. The chapter is structured into two parts. Part I outlines the tumultuous history of the company, then discusses what lessons this disturbing saga holds for corporate governance and shareholder advocacy. Part II focuses on the epic battle that emerged in the late 1760s surrounding the role of government in private enterprise, arguing that this struggle highlights the importance of intellectual fashions, public relations, and hidden agendas. In the end, it argues that the demise of the company should not be altogether surprising given the bargain the company had made, since its inception, with the state.

Accepted Paper Series