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The Company: A Short History of a Revolutionary Idea

Introduction: Utopia Limited (pg. xiii – xxiii)

Micklethwait and Wooldridge begin the book discussing a musical from Gilbert and Sullivan, Utopia Limited or The Flowers of Progress. These two men are called the titans of Victorian popular culture.

What is the theme of the musical from Gilbert & Sullivan? Why do you think Micklethwait & Wooldridge use this example to begin the book?

W.S. Gilbert Arthur Sullivan

Gilbert and Sullivan refers to the Victorian era partnership of librettist W. S. Gilbert (1836–1911) and composer Arthur Sullivan (1842–1900). The two men collaborated on fourteen comic operas between 1871 and 1896, of which H.M.S. Pinafore, The Pirates of Penzance and The Mikado are among the best known.[1]

The drawing room scene from Act II of Utopia

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Reference: Wikipedia: http://en.wikipedia.org/wiki/Gilbert_and_Sullivan

On page xv, Micklethwait & Wooldridge discuss the most important organization in the world. Also on page xv, Micklethwait & Wooldridge state, Companies have proved enormously powerful not just because they improve productivity, but also because they possess most of the legal rights of a human being, without the attendant disadvantages of biology: they are not condemned to die of old age and they can create progeny pretty much at will.

What is the most important organization in the world they are discussing? Why do they think it is the most important organization? What does this statement mean to you? Do you agree with what Micklethwait & Wooldridge stated?

On page xvi, Micklethwait & Wooldridge describe 2 ways to define a company.

Discuss the 2 ways they describe and give examples for each definition.

On page xvi, Micklethwait & Wooldridge state that during the 16th and 17th centuries, European monarchs created chartered companies to pursue their dreams of imperial expansions.

What are 3 chartered companies Micklethwait and Wooldridge describe? Describe each chartered company

William Gilbert said that there was fundamental change in 19th century Britain within the company. Micklethwait & Wooldridge conclude that they think he was right. The most powerful economic power of the day finally brought together the three big ideas behind the modern company...(p.xvii).

What are the 3 big ideas brought together by Gilbert behind the modern company? Why do you think this is important?

Just like in Wright’s A Short History of Progress, Micklethwait & Wooldridge discuss the Victorian age. Wright, from Sidney Pollard, states, the assumption that a pattern of change exists in the history of mankind...that it consists of irreversible changes in one direction only, and that this direction is towards improvement (Wright, 2000, p.3). Wright uses this to refer to changes in technology which helped us, society, make advances in our progress. We also know that this type of progression did not take moral progress into account with this material progress. Micklethwait & Wooldridge discuss how the company changed during this era.

What were these changes the Victorians made to the company?

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Are there any connections between Wright’s idea of progress during the Victorian age with the changes to the company during this same era? Discuss the connections you can make.

On page xx, Micklethwait & Wooldridge describe 3 themes that are important throughout this book.

List and describe the 3 themes Micklethwait & Wooldridge discuss.

On page xxi, Nicholas Murray Butler states, The limited liability corporation is the greatest single discovery of modern times. Micklethwait & Wooldridge continue by discussing an economist’s perspective on why such institutions are (also) crucial to economic development.

Explain the economist’s perspective on why these institutions are crucial to economic development.

Nicholas Murray Butler

12th President of Columbia University

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Nicholas Murray Butler (April 2, 1862 – December 7, 1947) was an American philosopher, diplomat, and educator. Butler was president of Columbia University, president of the Carnegie Endowment for International Peace, and a recipient of the Nobel Peace Prize. He became so well-known and respected that The New York Times printed his Christmas greeting to the nation every year.

Reference: Wikipedia http://en.wikipedia.org/wiki/Nicholas_Murray_Butler

As the introduction of the book comes to an end, Micklethwait & Wooldridge state, the company is much less powerful than it seems.

Why do Micklethwait & Wooldridge believe this? Do you agree with this statement? Why or why not?

On page xxiii, Micklethwait & Wooldridge explain 3 questions modern investors, managers, and workers ask:

1. What does this company do?2. Why do I work here?3. Will it make money?

Micklethwait & Wooldridge tell us to remember these 3 big questions while reading about the past of the company in this book.

Can you make any connections between these 3 questions and Wright’s 3 big questions (where do we come from? What are we? Where are we going?).

Choose 1 of the 3 roles, investor, manager, and worker, now ask yourself these questions posed by Micklethwait & Wooldridge. Could you give an answer for each question? Do you think these questions are useful?

Chapter 1: Merchants and Monopolists 3000 B.C. – A.D. 1500 (pg. 1 – 14)

This chapter discusses the beginnings of business and the peoples who formed them; however, they never formed a ‘company’ as we know them now, but created organizations that changed commercial life. On page 3, Micklethwait and Wooldridge discuss certain peoples and how they organized business system during their times, we have already read about these civilizations in Wright’s book, A Short History of Progress. These civilizations include, Mesopotamia, Sumerians, and the Assyrians.

Describe each system of all 3 of the civilizations mentioned above Discuss if there are any similarities between our current capitalist corporations with their

systems of business

On page 4, Mickelthwait and Wooldridge also mention the business systems of the Phoenicians and Athenians.

5

Why was the Athenian business model significant compared to the other systems?

Micklethwait and Wooldridge state, the societates of Rome were slightly more ambitious affairs (p. 4).

Discuss why this is true. What is a societate and when were they formed?

Limited partnershipFrom Wikipedia, the free encyclopedia

A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner.[1]

The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e. they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liability for the debts of the partnership.

As in a general partnership, the GPs have actual authority as agents of the firm to bind all the other partners in contracts with third parties that are in the ordinary course of the partnership's business. As with a general partnership, "An act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership's activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners."[2]

Like shareholders in a corporation, LPs have limited liability, meaning they are only liable on debts incurred by the firm to the extent of their registered investment and have no management authority. The GPs pay the LPs a return on their investment (similar to a dividend), the nature and extent of which is usually defined in the partnership agreement. General Partners thus carry more liability, and in cases of financial misfortune, the GP becomes "the generous partner".

Limited partnerships are distinct from limited liability partnerships, in which all partners have limited liability.

Limited liability

When the partnership is being constituted or the composition of the firm is changing, LPs are generally required to file documents with the relevant state registration office. LPs must also explicitly disclose their LP status when dealing with other parties, so that such parties are on notice that the individual negotiating with them carries limited liability. It is customary that the notepaper, other documentation, and electronic materials issued to the public by the firm will

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carry a clear statement identifying the legal nature of the firm and listing the partners separately as general and limited. Hence, unlike the GPs, the LPs do not have inherent agency authority to bind the firm unless they are subsequently held out as agents and so create an agency by estoppel or acts of ratification by the firm create ostensible authority.

In some jurisdictions, the limited liability of the LPs is contingent on their not participating in management.

History

The societates publicanorum which arose in Rome in the 3rd century BC may have arguably been the earliest form of limited partnership. During the heyday of the Roman Empire they were roughly equivalent to today's corporations: some had many investors, and interests were publicly tradable. However, they required at least one (and often several) partners with unlimited liability.[citation needed]

The Qirad and Mudaraba institutions in Islamic law and economic jurisprudence were more similar to the modern limited partnership. These were developed in the medieval Islamic world, when Islamic economics flourished and when early trading companies, big businesses, contracts, bills of exchange and long-distance international trade were established.[3][verification needed]

In medieval Italy, a business organization known as the commenda appeared in the 10th century that was generally used for financing maritime trade. In a commenda, the traveling trader of the ship had unlimited liability, but his investment partners on land were shielded. A commenda was not a common form for a long-term business venture as most long-term businesses were still expected to be secured against the assets of their individual proprietors.[4] As an institution, the commenda is very similar to the qirad but whether the qirad transformed into the commenda, or the two institutions evolved independently cannot be stated with certainty.[5]

Colbert's Ordinance of 1673 and the Napoleonic Code of 1807 reinforced the limited partnership concept in European law. In the United States, limited partnerships became widely available in the early 19th century, although a number of legal restrictions at the time made them unpopular for business ventures. Britain enacted its first limited partnership statute in 1907.[6]

Second Punic WarFrom Wikipedia, the free encyclopedia

Second Punic War

Part of the Punic Wars

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Borders of Roman and Punic zone of influence

in 218 BC, just prior to the war

Date 218 to 202 BC

LocationItalia, Sicily, Hispania, Cisalpine Gaul, Transalpine Gaul, Africa, Greece

ResultDecisive Roman victory, Rome gains absolute domination of the western Mediterranean

Territorialchanges

Rome gets foothold in Iberia and the Balearic Islands, Punic Africa becomes client of Rome, Numidia becomes united

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The Second Punic War, also referred to as The Hannibalic War and (by the Romans) The War Against Hannibal, lasted from 218 to 202 BC and involved combatants in the western and eastern Mediterranean. This was the second major war between Carthage and the Roman Republic, with the participation of the Berbers on Carthage's side. The two states had three major conflicts against each other over the courses of their existences. They are called the "Punic Wars" because Rome's name for Carthaginians was Punici, due to their Phoenician ancestry and their wide involvement with the Berbers.

The war is marked by Hannibal's surprising overland journey and his costly crossing of the Alps, followed by his reinforcement by Gaulish allies and crushing victories over Roman armies in the battle of the Trebia and the giant ambush at Trasimene. Against his skill on the battlefield the Romans deployed the Fabian strategy. But because of the increasing unpopularity of this approach, the Romans resorted to a further major field battle. The result was the Roman defeat at Cannae. In consequence many Roman allies went over to Carthage, prolonging the war in Italy for over a decade, during which more Roman armies were destroyed on the battlefield. Despite these setbacks, the Roman forces were more capable in siegecraft than the Carthaginians and recaptured all the major cities that had joined the enemy, as well as defeating a Carthaginian attempt to reinforce Hannibal at the battle of the Metaurus. In the meantime in Iberia, which served as the main source of manpower for the Carthaginian army, a second Roman expedition under Publius Cornelius Scipio Africanus Major took New Carthage by assault and ended Carthaginian rule over Iberia in the battle of Ilipa. The final showdown was the battle of Zama in Africa between Scipio Africanus and Hannibal, resulting in the latter's defeat and the imposition of harsh peace conditions on Carthage, which ceased to be a major power and became a Roman client-state.

A sideshow of this war was the indecisive first Macedonian War in the Eastern Mediterranean and the Ionian Sea.

All battles mentioned in the introduction are ranked among the most costly traditional battles of human history; in addition there were a few successful ambushes of armies that also ended in their annihilation.

Reference: Wikipedia http://en.wikipedia.org/wiki/Second_punic_war

On page 4, William Blackstone, a great 18th century jurist, claimed that the honour of inventing companies belongs entirely to the Romans.

Why does William Blackstone mention this? Do you agree, why or why not? Where was the wealth most concentrated in Rome? Why do you think this is important?

More about William Blackstone:

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Portrait of Sir William Blackstone by Thomas Gainsborough, 1774.

William BlackstoneFrom Wikipedia, the free encyclopedia

Sir William Blackstone (10 July 1723 – 14 February 1780) was an English judge, jurist and professor who produced the historical and analytic treatise on the common law entitled Commentaries on the Laws of England, first published in four volumes over 1765–1769. It had an extraordinary success, reportedly bringing the author £14,000, and still remains an important source on classical views of the common law and its principles.

Reference: Wikipedia http://en.wikipedia.org/wiki/William_Blackstone

When Rome’s empire collapsed the focus of commercial life moved to India, China and the Islamic world. The prophet Muhammed (569 – 632) was a trader. The Muslim religion encouraged this responsible money making (p.5). However, it was China, which gained a huge technological lead over the West.

How did the Chinese gain this lead? Who is William the Conqueror? What did the Chinese pioneer? Currently, China is one of the fastest growing developing countries. However, China is

behind the Western world now, in their development of technology. What conclusions can you make about this? (Refer to page 6 – 7 and your own thoughts).

What happened to the “big” companies in China?

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William the ConquerorFrom Wikipedia, the free encyclopedia

William the Conqueror

The Duke of Normandy in the Bayeux Tapestry

King of the English

Reign 25 December 1066 – 9 September 1087

Coronation 25 December 1066

Predecessor Edgar Ætheling (uncrowned)(otherwise) Harold II

Successor William II

Duke of the Normans

Reign 3 July 1035 – 9 September 1087

Predecessor Robert the Magnificent

Successor Robert Curthose

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Spouse Matilda of Flanders

House Norman dynasty

Father Robert I, Duke of Normandy

Mother Herlette of Falaise

Bornc. 1027[1]

Château de Falaise, Falaise, Normandy, France

Died 9 September 1087 (aged c.60)Convent of St. Gervais, Rouen, France

Burial Saint-Étienne de Caen, France

William the Conqueror (French: Guillaume le Conquérant) (circa 1028[1] – 9 September 1087), also known as William I of England (Guillaume Ier d’Angleterre) and William II of Normandy (Guillaume II de Normandie), was the first Norman King of England from Christmas, 1066 until his death. He was also Duke of Normandy from 3 July 1035 until his death. Before his conquest of England, he was known as William the Bastard (Guillaume le Bâtard) because of the illegitimacy of his birth.

To press his claim to the English crown, William invaded England in 1066, leading an army of Normans, Bretons, Flemings, and Frenchmen (from Paris and Île-de-France) to victory over the English forces of King Harold Godwinson at the Battle of Hastings, and suppressed subsequent English revolts in what has become known as the Norman Conquest.[2] His reign, which brought Norman-French culture to England, had an impact on the subsequent course of England in the Middle Ages. The details of that impact and the extent of the changes have been debated by scholars for centuries. In addition to the obvious change of ruler, his reign also saw a programme of building and fortification, changes to the English language, a shift in the upper levels of society and the church, and adoption of some aspects of continental church reform.

Reference: Wikipedia http://en.wikipedia.org/wiki/William_the_Conqueror

Micklethwait and Wooldridge start to discuss merchant empires of Italy and the state chartered corporations and guilds of Northern Europe. Micklethwait and Wooldridge discuss maritime firms which appeared in the 9th century and on.

What did the earliest version of this system look like? Are there any similarities to the model of organization we know of today?

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During the 12th century a different type of organization was formed in Florence: the compagnia. (page 8).

How did the compagnia begin? What is joint – liability? Provide an example with your answer. Why was trust so important? Do you believe trust to be as important in business today as it was then? How was the word compagnia formed?

On page 8, Micklethwait and Wooldridge state how the compagnia became more sophisticated over time by trying to attract investment from outside the family circle.

What happened around 1340? Why is this significant?

The compagnia was also closely related to the banchi. The banchi must be important because it is mentioned in the Inferno (1314) and it is said that Dante sent usurers to the seventh circle of hell to be tortured by a rain of fire, and in many cities bankers were forbidden along with prostitutes, from receiving communion (p.8).

What is a banchi? Why were these important? What happened from Florence’s addiction to warfare (as Micklethwait & Wooldridge put

it)

Dante AlighieriFrom Wikipedia, the free encyclopedia

Dante Alighieri

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Dante Alighieri, painted by pupils of Giotto in the chapel

of the Bargello palace in Florence. The oldest picture of

Dante, but not a truly authentic portrait: was painted

fifteen years after his death, and has since been heavily

restored.

Bornmid-May to mid-June 1265

Florence

DiedSeptember 14, 1321 (aged about 56)

Ravenna

Occupation Statesman, poet, language theorist

Nationality Italian

Dante Alighieri (May/June c.1265 – September 14, 1321), commonly known as Dante, was an Italian poet of the Middle Ages. He was born in Florence; he died and is buried in Ravenna. The name Dante is, according to the words of Jacopo Alighieri, a hypocorism for Durante. In contemporary documents it is followed by the patronymic Alagherii or de Alagheriis; it was Boccaccio who popularized the form Alighieri.

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His Divine Comedy, originally called Commedia by the author and later nicknamed Divina by Boccaccio, is often considered the greatest literary work composed in the Italian language and a masterpiece of world literature.[1]

In Italy he is known as "the Supreme Poet" (il Sommo Poeta) or just il Poeta. Dante, Petrarch, and Boccaccio are also known as "the three fountains" or "the three crowns". Dante is also called the "Father of the Italian language".

Reference: Wikipedia http://en.wikipedia.org/wiki/Dante

In 1397, The Medici bank was set up by Giovanni di Bicci de’ Medici. This bank eventually spawned four popes and two queens of France and provided much of the capital for the Renaissance (p.9).

What was the family’s great advantage? How did the Medici get around the papal ban on Christians receiving interest? What did the Medici diversify into? What happened to the Medici when it expanded? Cosimo de’ Medici (1389 – 1464) took over supervision – what happened when he did? What happened when Cosimo died and why is this important?

Giovanni di Bicci de' MediciFrom Wikipedia, the free encyclopedia

Giovanni de' Medici

Portrait by Cristofano dell'Altissimo.

Spouse(s) Piccarda Bueri

Issue

Cosimo de' Medici

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Lorenzo the Elder

Noble family Medici

Father Averardo de' Medici

Mother Jacopa Spini

Born 1360Florence, Republic of Florence

Died 20 February 1429 (aged 69)Florence, Republic of Florence

Giovanni di Bicci de' Medici (1360 – February 20/28, 1429) was an Italian banker, the first historically relevant member of Medici family of Florence, and the founder of the Medici bank. He was the father of Cosimo de' Medici (Pater Patriae), and great-grandfather of Lorenzo de Medici (the Magnificent).

Giovanni di Bicci de' Medici was born in Florence. He was the son of Averardo de' Medici. Though he is considered the founder of the rich Medici dynasty, he was not born into a rich family. The little money left by his father was divided between a widow and five sons, leaving Giovanni with little.

Giovanni was somewhat uninterested in politics, unless the issues pertained to him or his bank. Often when his name was put forward to participate in the Florentine government (reggimento), he chose to pay the fine rather than serve, although he did serve one term as Gonfaloniere.

Giovanni was the head of an early "multi-national" company, as the family bank, his main commercial interest, had branches throughout the northern Italian city-states and beyond. In 1410, Giovanni bet on the return of the papacy to Rome, and was correct. Rewarding Giovanni for his support, subsequent popes made use of the de' Medici banks. Giovanni was also rewarded with tax-farming contracts and the rights to many alum mines. He set his family on the path to becoming one of the richest dynasties in Europe, thereby making an essential stride towards its later cultural and political eminence.

Children Cosimo di Giovanni de' Medici Lorenzo di Giovanni de' Medici

Reference: Wikipedia http://en.wikipedia.org/wiki/Giovanni_di_Bicci_de%27_Medici

Cosimo de' MediciFrom Wikipedia, the free encyclopedia

Cosimo di Medici

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Portrait by Bronzino.

Spouse(s) Contessina de' Bardi

Issue

Piero the GoutyGiovanni de' MediciCarlo di Cosimo de' Medici (illegitimate)

Noble family Medici

Father Giovanni di Bicci de' Medici

Mother Piccarda Bueri

Born 27 September 1389Florence, Republic of Florence

Died 1 August 1464 (aged 74)Careggi, Republic of Florence

Còsimo di Giovanni degli Mèdici (September 27, 1389 – August 1, 1464) was the first of the Medici political dynasty, de facto rulers of Florence during much of the Italian Renaissance; also known as "Cosimo 'the Elder'" ("il Vecchio") and "Cosimo Pater Patriae".

Biography

Born in Florence, Cosimo inherited both his wealth and his expertise in business from his father, Giovanni di Bicci de' Medici. In 1415 he accompanied the Antipope John XXIII at the council of

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Constance, and in the same year he was named Priore of the Republic. Later he acted frequently as ambassador, showing a prudence for which he became renowned.

His power over Florence stemmed from his wealth, which he used to control votes. As Florence was proud of its 'democracy', he pretended to have little political ambition, and did not often hold public office. Aeneas Sylvius, Bishop of Siena and later Pope Pius II, said: "Political questions are settled in [Cosimo's] house. The man he chooses holds office...He it is who decides peace and war...He is king in all but name." Quoted by C.Hibbert in The Rise and Fall of the House of Medici, 1974.[1]

In 1433 Cosimo's power over Florence, which he exerted without occupying public office, began to look like a menace to the anti-Medici party, led by figures such as Palla Strozzi and Rinaldo degli Albizzi: in September of that year he was imprisoned, accused for the failure of the conquest of Lucca, but he managed to turn the jail term into one of exile. He went to Padua and then to Venice, taking his bank along with him. Prompted by his influence and his money, others followed him: within a year, the flight of capital from Florence was so great that the ban of exile had to be lifted. Cosimo returned a year later in 1434, to greatly influence the government of Florence (especially through the Pitti and Soderini families) and to lead by example for the rest of his long life.

Cosimo's time in exile instilled in him the need to squash the factionalism that resulted in his exile in the first place. In order to do this, Cosimo, with the help of favourable priors in the Signoria, instigated a series of constitutional changes to secure his power through influence.

Reference: Wikipedia http://en.wikipedia.org/wiki/Cosimo_de%27_Medici

On page 10, Micklethwait & Wooldridge discuss business during the 14th century and a businessman named Francesco di Marco Datini. He was born in Prato in 1335 and as a young man set out for Avignon.

What was Datini’s motto? Why did he return to Prato?

By the end of the century what did his compagnie deal with?

What did he do with all his money when he died?

What does Micklethwait and Wooldridge say that the company he left behind after he died seems remarkably modern? Do you agree?

Why did he distribute his money in as many places as possible according to Origo?

What happened to his company 5 years after his death?

Francesco di Marco DatiniFrom Wikipedia, the free encyclopedia

Jump to: navigation, search

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Statue of Datini in Prato.

Francesco di Marco Datini (c. 1335 – 16 August 1410) was an Italian merchant born in Prato.

Biography

He was the only child of Marco di Datino and Monna Vermigilia, who both died as a result of the Black Death in 1348.

After his parents death, he was raised by a woman whom he called his "substitute mother." Their relationship seems to have been a positive one. We see a letter from her signed "your mother in love."[1]

He became an apprentice of a merchant in Florence and when he was fifteen, he joined a group of merchants who were going to Avignon, the city where the Popes had moved at the time.[1] His first business was the arms trade, which was quite profitable in Avignon during the Hundred Years' War.[2] He eventually became a supplier of luxury goods and art for the wealthy cardinals residing there.[1] The works of art these figures bought were some of the first consumed for private, non religious use. Before this time, the church had been the primary patron of the arts. Later on, the papacy and other pious individuals commissioned religious artwork, creating a use for Francesco's merchant skills. He was not interested in the product itself, but whether it was good quality or not, so that it might please his buyers.[1] This individual buying of artwork is a trend that we see going into the renaissance.

When Datini was more than forty years old he returned to Prato briefly and married Marghareta, who was 25 years his junior. The correspondence through letter provides us with exchanged letters weekly while Datini was away on business, which provides most of the information

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available today on his life. In the year 1400 (around the time of 17 June), the two fled from Prato to Bologna in fear of the Black Death, along with Datini's illegitimate daughter.[1] He returned to die a natural death in 1410.[3]

Datini is representative of the classic middle class man of the Middle Ages who lived through the Black Death and shared common anxieties surrounding it. His belief, that the plague was caused by contagion, represents one of the characteristic theories behind the dispersion of the plague. For this reason he and others fled the areas of disease or retreated in castles in an attempt to avoid infection. He shows the fears of the Middle Ages, having been living away from his family, he was extremely anxious and worried about his family's fate.

Reference Wikipedia http://en.wikipedia.org/wiki/Francesco_di_Marco_Datini

On page 12, Micklethwait and Wooldridge discuss Northern Europe around the middle ages and the development of the corporation.

What was the most important contribution from the north as stated by Micklethwait & Wooldridge?

Describe a “corporate persons”.

List and describe 1 main corporation which still exists today?

What is a guild? Why were they the most important business organization during the middle ages?

Describe “regulated companies”.

What is the same and different between a guild and regulated companies?

What was the most successful of the regulated companies?

GuildFrom Wikipedia, the free encyclopedia

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One of the legacies of the guilds, the elevated Windsor Guildhall was originally a meeting place for guilds, as well as magistrates' seat and town hall.

A guild is an association of craftsmen in a particular trade. The earliest guilds were formed as confraternities of workers. They were organized in a manner something between a trade union, a cartel and a secret society. They often depended on grants of letters patent by an authority or monarch to enforce the flow of trade to their self-employed members, and to retain ownership of tools and the supply of materials. A lasting legacy of traditional guilds are the guildhalls constructed and used as meeting places.

European history

In the Early Middle Ages most of the Roman craft organizations, originally formed as religious confraternities, had disappeared, with the apparent exceptions of stonecutters and perhaps glassmakers. Gregory of Tours tells a miraculous tale of a builder whose art and techniques suddenly left him, but were restored by an apparition of the Virgin Mary in a dream. Michel Rouche[2] remarks that the story speaks for the importance of practically transmitted journeymanship.

The early egalitarian communities called "guilds" (for the gold deposited in their common funds) were denounced by Catholic clergy for their "conjurations"—the binding oaths sworn among artisans to support one another in adversity and back one another in feuds or in business ventures. The occasion for the drunken banquets at which these oaths were made was December 25, the pagan feast of Jul: Bishop Hincmar, in 858, sought vainly to Christianize them.[3]

By about 1100, European guilds (or gilds) and livery companies began their medieval progression into an approximate equivalent to modern-day business organizations such as institutes or consortia. The guilds were termed corps de métiers in France, where the more familiar term corporations did not appear until the Le Chapelier Law of 1791 that abolished them, according to Fernand Braudel.[4] The guild system reached a mature state in Germany circa 1300 and held on in the German cities into the 19th century, with some special privileges for certain occupations remaining today. The latest guilds to develop in Western Europe were the gremios of Spain: e.g., Barcelona (1301), Valencia (1332) and Toledo (1426).

Not all city economies were controlled by guilds; some cities were "free". Where guilds were in control they shaped labour, production and trade; they had strong controls over instructional capital, and the modern concepts of a lifetime progression of apprentice to craftsman, journeyman, and eventually to widely-recognized master and grandmaster began to emerge. As production became more specialized, trade guilds were divided and subdivided, eliciting the squabbles over jurisdiction that produced the paperwork by which economic historians trace their

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development: there were 101 trades in Paris by 1260,[5] and earlier in the century the metalworking guilds of Nuremberg were already divided among dozens of independent trades, in the boom economy of the 13th century. In Ghent as in Florence the woolen textile industry developed as a congeries of specialized guilds. The appearance of the European guilds was tied to the emergent money economy, and to urbanization. Before this time it was not possible to run a money-driven organization, as commodity money was the normal way of doing business.

A center of urban government: the Guildhall, London (engraving, ca 1805)

The guild was at the center of European handicraft organization into the 16th century. In France, a resurgence of the guilds in the second half of the 17th century is symptomatic of the monarchy's concerns to impose unity, control production and reap the benefits of transparent structure in the shape of more efficient taxation.[citation needed] Although many people believe there were guilds for food to travel to soldiers, in Europe during the 16th century there were only craft-making guilds.[citation needed]

The guilds were identified with organizations enjoying certain privileges (letters patent), usually issued by the king or state and overseen by local town business authorities (some kind of chamber of commerce). These were the predecessors of the modern patent and trademark system. The guilds also maintained funds in order to support infirm or elderly members, as well as widows and orphans of guild members, funeral benefits, and a 'tramping' allowance for those needing to travel to find work. As the guild system of the City of London declined during the 17th century, the Livery Companies transformed into mutual assistance fraternities along such lines.

European guilds imposed long standardized periods of apprenticeship, and made it difficult for those lacking the capital to set up for themselves or without the approval of their peers to gain access to materials or knowledge, or to sell into certain markets, an area that equally dominated the guilds' concerns. These are defining characteristics of mercantilism in economics, which dominated most European thinking about political economy until the rise of classical economics.

The guild system survived the emergence of early capitalists, which began to divide guild members into "haves" and dependent "have-nots". The civil struggles that characterize the 14th century towns and cities were struggles in part between the greater guilds and the lesser artisanal guilds, which depended on piecework. "In Florence, they were openly distinguished: the Arti maggiori and the Arti minori—already there was a popolo grasso and a popolo magro".[6] Fiercer

22

struggles were those between essentially conservative guilds and the merchant class, which increasingly came to control the means of production and the capital that could be ventured in expansive schemes, often under the rules of guilds of their own. German social historians trace the Zunftrevolution, the urban revolution of guildmembers against a controlling urban patriciate, sometimes reading into them, however, perceived foretastes of the class struggles of the 19th century.

In the countryside, where guild rules did not operate, there was freedom for the entrepreneur with capital to organize cottage industry, a network of cottagers who spun and wove in their own premises on his account, provided with their raw materials, perhaps even their looms, by the capitalist who reaped the profits. Such a dispersed system could not so easily be controlled where there was a vigorous local market for the raw materials: wool was easily available in sheep-rearing regions, whereas silk was not

Reference Wikipedia http://en.wikipedia.org/wiki/Guild

Chapter 2: Imperialists and Speculators 1500 – 1750 (pg. 15 – 37)

In chapter 2, Micklethwait & Wooldridge discuss the emergence of the most remarkable business organizations in the world: chartered companies during the 16th and 17th century (p.15). These organizations are world known, such as, The British East India Company and Hudson Bay Company.

Discuss why these 2 companies mentioned above are significant

As Micklethwait and Wooldridge state, chartered companies represented a combined effort by government and merchants to grab the riches of the new worlds opened up by Columbus (1451 – 1506), Magellan (1480 – 1521) and Vasco da Gama (1469 – 1524). They bestraddle the public and private sectors (p. 17).

Christopher ColumbusFrom Wikipedia, the free encyclopedia

Christopher Columbus

23

Posthumous portrait of Christopher Columbus by

Ridolfo Ghirlandaio. There are no known authentic

portraits of Columbus.

Born

Between 25 August and 31 October

1451

Genoa, Republic of Genoa, in present-

day Italy

Died20 May 1506 (aged 54)

Valladolid, Crown of Castile, in present-

day Spain

Nationality Genoese

Other names

Genoese: Christoffa Corombo

Italian: Cristoforo Colombo

Catalan: Cristòfor Colom

Spanish: Cristóbal Colón

Portuguese: Cristóvão Colombo

Latin: Christophorus Columbus

OccupationMaritime explorer for the Crown of

Castile

TitleAdmiral of the Ocean Sea; Viceroy and

Governor of the Indies

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Religion Roman Catholic

Spouse Filipa Moniz Perestrelo (c. 1455-1485)

ChildrenDiego

Fernando

RelativesGiovanni Pellegrino, Giacomo and

Bartholomew Columbus (brothers)

Signature

Christopher Columbus (c. 31 October 1451 – 20 May 1506) was a navigator, colonizer, and explorer from Genoa, Italy,[1][2][3][4] whose voyages across the Atlantic Ocean led to general European awareness of the American continents in the Western Hemisphere. With his four voyages of exploration and several attempts at establishing a settlement on the island of Hispaniola, all funded by Isabella I of Castile, he initiated the process of Spanish colonization which foreshadowed general European colonization of the "New World".

Although not the first to reach the Americas from Europe—he was preceded by at least one other group, the Norse, led by Leif Ericson, who built a temporary settlement 500 years earlier at L'Anse aux Meadows [5] — Columbus initiated widespread contact between Europeans and indigenous Americans.

The term "pre-Columbian" is usually used to refer to the peoples and cultures of the Americas before the arrival of Columbus and his European successors.

The name Christopher Columbus is the Anglicisation of the Latin Christophorus Columbus. The original name in 15th century Genoese language was Christoffa[6] Corombo[7] (pronounced IPA: [kriˈʃtɔffa kuˈɹuŋbu][dubious – discuss][8]).

Columbus's initial 1492 voyage came at a critical time of emerging modern western imperialism and economic competition between developing kingdoms seeking wealth from the establishment of trade routes and colonies. In this sociopolitical climate, Columbus's far-fetched scheme won the attention of Isabella I of Castile. Severely underestimating the circumference of the Earth, he estimated that a westward route from Iberia to the Indies would be shorter than the overland trade route through Arabia. If true, this would allow Spain entry into the lucrative spice trade — heretofore commanded by the Arabs and Italians. Following his plotted course, he instead landed

25

within the Bahamas Archipelago at a locale he named San Salvador. Mistaking the lands he encountered for Asia, he referred to the inhabitants as "indios" (Spanish for "Indians").[9][10][11]

The anniversary of Columbus's 1492 landing in the Americas is usually observed as Columbus Day on 12 October in Spain and throughout the Americas, except Canada. In the United States it is observed annually on the second Monday in October.

Reference: Wikipedia http://en.wikipedia.org/wiki/Christopher_Columbus

Ferdinand MagellanFrom Wikipedia, the free encyclopedia

Ferdinand Magellan

BornFernão de Magalhães

1480

Sabrosa, Portugal

DiedApril 27, 1521 (aged 40–41)

Cebu, Philippines

Nationality Portuguese

Citizenship Spanish

Known forCaptained the first circumnavigation

expedition.

26

Signature

Ferdinand Magellan (Portuguese: Fernão de Magalhães, pronounced [fɨɾˈnɐ̃w̃ ðɨ mɐɡɐˈʎɐ̃ȷ̃s]; Spanish: Fernando de Magallanes, pronounced [feɾ'naNdo ðe maɣa'ʎanes]; c. 1480 – April 27, 1521) was a Portuguese explorer. He was born in Sabrosa, in northern Portugal, but later obtained Spanish nationality in order to serve King Charles I of Spain in search of a westward route to the "Spice Islands" (modern Maluku Islands in Indonesia).

Magellan's expedition of 1519–1522 became the first expedition to sail from the Atlantic Ocean into the Pacific Ocean (then named "peaceful sea" by Magellan; the passage being made via the Strait of Magellan), and the first to cross the Pacific. It also completed the first circumnavigation of the Earth, although Magellan himself did not complete the entire voyage, being killed during the Battle of Mactan in the Philippines. (Magellan had, however, traveled eastwards to the Malay Peninsula on an earlier voyage, so he became one of the first explorers to cross all of the meridians of the globe.) Of the 237 men who set out on five ships, only 18 completed the circumnavigation and managed to return to Spain in 1522,[1][2] led by the Basque navigator Juan Sebastián Elcano, who took over command of the expedition after Magellan's death. Seventeen other men arrived later in Spain: twelve men captured by the Portuguese in Cape Verde some weeks earlier and between 1525 and 1527, and five survivors of the Trinidad.

Magellan also gives his name to the Magellanic Penguin, which he was the first European to note,[3] and the Magellanic clouds, now known to be nearby dwarf galaxies.

Reference: Wikipedia http://en.wikipedia.org/wiki/Ferdinand_Magellan

Vasco da GamaFrom Wikipedia, the free encyclopedia

Vasco da Gama

27

Born1460

Sines, Alentejo, Portugal

Died24 December 1524 (aged 64)

Kochi, India

Occupation Explorer, Governor of Portuguese India

Signature

Vasco da Gama, 1st Count of Vidigueira (Portuguese pronunciation: [ˈvaʃku dɐ ˈɡɐmɐ]) (Sines or Vidigueira, Alentejo, Portugal, around 1460 or 1469 – 24 December 1524 in Kochi, India) was a Portuguese explorer, one of the most successful in the European Age of Discovery and the commander of the first ships to sail directly from Europe to India. For a short time in 1524 he was Governor of Portuguese India under the title of Viceroy.

Reference: Wikipedia http://en.wikipedia.org/wiki/Vasco_da_gama

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With some chartered companies, monarchs insisted on a share in the firm himself. This is what Colbert (1619 – 1683) did on the French King’s behalf when he set up his country’s East India company in 1664 (p. 15).

Jean-Baptiste ColbertFrom Wikipedia, the free encyclopedia

Jean-Baptiste Colbert

Controller-General of Finances

In office1665–1683

Born 29 August 1619Reims, France

Died 6 September 1683 (aged 64)

Jean-Baptiste Colbert (29 August 1619 – 6 September 1683) served as the French minister of finance from 1665 to 1683 under the rule of King Louis XIV. His relentless hard work and thrift made him an esteemed minister. He achieved a reputation for his work of improving the state of French manufacturing and bringing the economy back from the brink of bankruptcy. Historians note that, despite Colbert's efforts, France actually became increasingly impoverished because of

29

the King's excessive spending on wars. Colbert worked to create a favourable balance of trade and increase France's colonial holdings. Historians of mercantilism consider Colbert a key figure.[citation needed] Colbert's plan was to build a general academy.

Colbert's market reforms included the foundation of the Manufacture royale de glaces de miroirs in 1665 to supplant the importation of Venetian glass (forbidden in 1672, as soon as French glass manufacture was on a sound basis) and to encourage the technical expertise of Flemish cloth manufacturing in France. He also founded royal tapestry works at Gobelins and supported those at Beauvais. Colbert worked to improve the economy via tariffs and the construction of internal improvements. In regard to foreign markets, Colbert aimed to ensure that the French East India Company could obtain coffee, cotton, dyewoods, fur, pepper, and sugar. In addition, Colbert founded a French merchant marine.

Colbert issued more than 150 edicts to regulate the guilds. One such law had the intention of improving the quality of cloth. The edict declared that if the authorities found a merchant's cloth unsatisfactory on three separate occasions, they were to tie him to a post with the cloth attached to him.

Reference: Wikipedia http://en.wikipedia.org/wiki/Jean-Baptiste_Colbert

Chartered companies drew on 2 ideas from the Middle Ages.

Explain these 2 ideas. What was the first chartered joint-stock company and when was it given its charter?

What happened to the Muscovy Company?

Richard Hakluyt (1552 – 1616) was responsible for interest in America and for persuading Elizabeth I to grant charters to several groups of investors.

What was the Discourse on Western Planting (1584)? What was the reason Hakluyt wanted to colonize America?

What was important about the Virginia Company?

Richard HakluytFrom Wikipedia, the free encyclopedia

Richard Hakluyt

30

Hakluyt depicted in stained glass in the West Window of

the South Transept of Bristol Cathedral – Charles

Eamer Kempe, c. 1905.

Bornc. 1552 or 1553

Hereford, Herefordshire; or London,

England

Died23 November 1616 (aged 64)

London, England

Occupation Author, editor and translator

Nationality English

Period 1580–1609

Subjects Exploration; geography; travel

31

Signature

Richard Hakluyt (pronounced /ˈhæklʊt/, /ˈhæklət/, or /ˈhækəlwɪt/)[1] (c. 1552 or 1553 – 23 November 1616) was an English writer. He is principally remembered for his efforts in promoting and supporting the settlement of North America by the English through his works, notably Divers Voyages Touching the Discoverie of America (1582) and The Principal Navigations, Voiages, Traffiques and Discoueries of the English Nation (1589–1600).

Educated at Westminster School and Christ Church, Oxford, between 1583 and 1588 Hakluyt was chaplain and secretary to Sir Edward Stafford, English ambassador at the French court. An ordained priest, Hakluyt held important positions at Bristol Cathedral and Westminster Abbey and was personal chaplain to Sir Robert Cecil, 1st Earl of Salisbury, principal Secretary of State to Elizabeth I and James I. He was the chief promoter of a petition to James I for letters patent to colonize Virginia, which were granted to the London Company and Plymouth Company (referred to collectively as the Virginia Company) in 1606.

Reference: Wikipedia http://en.wikipedia.org/wiki/Richard_Hakluyt

On page 19, Micklethwait and Wooldridge discuss the necessity of charters, shares and limited liability. They begin with an example of Edward Fenton, who was going to capture the island of St. Helena and there to be proclaimed king. However, the merchants wanted James Lancaster but he came home with only 25 crew left after 198 men died from disease and storms. In 1595, former spy Cornelius de Houtman was chosen by the Dutch to go. He went to Bantam, where he executed locals, poisoned one of his own captains and returned home with two-thirds of his crew gone.

What did the Dutch merchants decide was preferable to this type of system? What was the model for all chartered firms?

What was the Dutch first to do?

What was the Westindische Compagnie fixated on?

Why did reformers see the joint-stock company as dangerous and old-fashioned?

Edward FentonFrom Wikipedia, the free encyclopedia

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Edward Fenton (died 1603) was an English navigator, son of Henry Fenton and brother of Sir Geoffrey Fenton.

He was a native of Nottinghamshire. In 1577 he sailed, in command of the Gabriel, with Sir Martin Frobisher's second expedition for the discovery of the Northwest Passage, and in the following year he took part as second in command in Frobisher's third expedition, his ship being the Judith.

He was then employed in Ireland for a time, but in 1582 he was put in charge of an expedition which was to sail round the Cape of Good Hope to the Moluccas and China, his instructions being to obtain any knowledge of the northwest passage that was possible without hindrance to his trade. On this unsuccessful voyage he got no farther than Brazil, and throughout he was engaged in quarrelling with his officers, and especially with his lieutenant, William Hawkins, the nephew of Sir John Hawkins, whom he had in irons when he arrived back in the Thames. In 1588 he had command of the Mary Rose, one of the ships of the fleet that was formed to oppose the Spanish Armada. He died fifteen years afterwards.

Reference Wikipedia http://en.wikipedia.org/wiki/Edward_Fenton

James LancasterFrom Wikipedia, the free encyclopedia

Jump to: navigation, search

Sir James Lancaster

Sir James Lancaster (died 1618) was a prominent Elizabethan trader and privateer. Lancaster came from Basingstoke in Hampshire. In his early life, he was a soldier and a trader in Portugal.

33

On the 10th of April 1591 he started from Plymouth, with Raymond and Foxcroft, on his first great voyage to the East Indies; this fleet of three ships is the earliest of English oversea Indian expeditions. Reaching Table Bay (1 August 1591), and losing one ship off Cape Corrientes on 12 September, the squadron rested and refitted at Zanzibar (February 1592), rounded Cape Comorin the following May, and reached the Malay Peninsula in June. During this voyage, Lancaster's ships attacked for plunder every ship they encountered.

After a later crossing to Ceylon, the crews insisted on returning home. The return voyage was disastrous with only twenty-five officers and men surviving to reach England in May 1594. Lancaster himself reached Rye on 24 May 1594; in the same year he led a military expedition against Pernambuco, without much success; but his Indian voyage, like Ralph Fitchs overland explorations and trading, was an important factor in the foundation of the East India Company. In 1600 he was given command of the company's first fleet (which sailed from Torbay towards the end of April 1601); his vessel was the Red Dragon. He was also accredited as Queen Elizabeth's special envoy to various Eastern potentates. Going by the Cape of Good Hope (1st of November 1601) Lancaster visited the Nicobars (from 9 April 1602), Aceh and other parts of Sumatra (from 5 June 1602), and Bantam in Java. An alliance was established with Aceh, the first English East India Company factory established at Bantam and a commercial mission despatched to the Moluccas. The return voyage from 20 February to 11 September 1603 was speedy and prosperous, and Lancaster (whose success both in trade and diplomacy had been brilliant) was rewarded with a knighthood in October 1603.

Lancaster continued to be one of the chief directors of the East India Company until his death in May 1618. Most of the voyages of the early Stuart time both to India and in search of the Northwest Passage were undertaken under his sponsorship and direction. In July 1616, Lancaster Sound, north-west of Baffin Bay (74° 20' N.), was named by William Baffin after Sir James.

His will (dated 18 April 1618)[1] established two charitable trusts administered by the Skinners' Company. One was for the benefit of officials and poor people in Basingstoke, and was subsequently transferred by court order to Basingstoke Corporation [2] in 1717. The other was for poor divinity students at Oxford and Cambridge, to whom the Skinners' Company still makes grants today.[1]

Reference Wikipedia http://en.wikipedia.org/wiki/James_Lancaster

Cornelis de HoutmanFrom Wikipedia, the free encyclopedia

Cornelis de Houtman

34

Born2 April 1565

Gouda, Holland, Seventeen Provinces

DiedAugust 1599

Aceh Sultanate

Nationality Dutch

Occupation Explorer

Cornelis de Houtman (2 April 1565 – August 1599), brother of Frederick de Houtman, was a Dutch explorer who discovered a new sea route from Europe to Indonesia and managed to begin the Dutch spice trade. At the time, the Portuguese Empire held a monopoly on the spice trade, and the voyage was a symbolic victory for the Dutch, even though the voyage itself was a disaster.

The voyage

In 1592 Cornelis de Houtman was sent by Amsterdam merchants to Lisbon to discover as much information on the Spice Islands as he could. At the same time as he returned to Amsterdam, Jan Huygen van Linschoten returned from India. The merchants determined that Bantam (Banten) provided the best opportunity to buy spices. In 1594 the merchants founded the company 'compagnie van Verre' (meaning "the long-distance company"), and on April 2, 1595 four ships left Amsterdam: Amsterdam, Hollandia, Mauritius and Duyfken.

35

Monument for Cornelis and Frederick de Houtman in Gouda, Netherlands

The voyage was beset with trouble from the beginning. Scurvy broke out after only a few weeks due to insufficient provisions. Due to quarrels among the captains and traders, several were killed or imprisoned on board. At Madagascar, where a brief stop was planned, further complications led to many more deaths, and the ships remained there for six months on a deathwatch. (The Madagascan bay where they were anchored is now known as the "Dutch Cemetery".) On June 27, the ships finally arrived at Banten, a northwestern port in Java. Only around a hundred of the original 249 men had survived the voyage.

The local Portuguese traders introduced de Houtman to the Banten sultan, who promptly entered into an optimistic treaty with the Dutch, writing "We are well content to have a permanent league of alliance and friendship with His Highness the Prince Maurice of Nassau, of the Netherlands and with you, gentlemen." Unfortunately, de Houtman was undiplomatic and insulting to the sultan, and was turned away for "rude behaviour" without being able to buy any spices at all.

The ships then sailed east to Madura, but were attacked by pirates on the way. In Madura, they were received peacefully, but de Houtman ordered his men to brutally attack and rape the civilian population in revenge for the unrelated earlier piracy.[1]

The ships then sailed for Bali, and met with the region's king. They finally managed to obtain a few pots of peppercorns on February 26, 1597. Portuguese ships prevented them from taking in water and supplies at St. Helena. Out of the 249 man crew, only 87 returned, too weak to moor their ships themselves.

In September 11, 1599, Cornelis de Houtman and his troops got confrontation with Aceh because of his rude temperament, and soon there were fierce battle with Aceh Navy which led by Aceh's woman admiral, Keumalahayati (Malahayati). In one battle, Malahayati succeed killed Cornelis

36

de Houtman. And since that accident, Queen Elizabeth I from England decided to sent an emissary to Aceh Sultan for asking their permission to enter Malacca Strait.

Repercussions

Though the trip was a humanitarian disaster and financially probably just broke even, it was a symbolic victory. It may be regarded as the start of the Dutch colonisation of Indonesia. Within five years, sixty-five more Dutch ships had gone East to trade. Soon, the Dutch would fully take over the spice trade in and around the Indian Ocean.

Reference Wikipedia http://en.wikipedia.org/wiki/Cornelis_de_Houtman

On page 21, Micklethwait and Wooldridge state, On Sept 24, 1599, a group of 80 merchants and adventurers, met at the Founders Hall in the City of London. They agreed to petition Elizabeth I to set up a company to trade with the East Indies.

What happened in September 1603? Were the early voyages profitable or not?

What happened in 1612?

List the cargo the company traded (include with India, China, Japan and Philippines).

Describe the two-tier structure the East Indies merchants created.

The company referred to the firm as “family,” what did this entail? Are they any connections between structures of a corporation today with the company then?

The company almost died in the mid-17th century (page 24).

What was attributed to this in America? What happened on October 19?

By the late 17th century the company was a well organized monopoly. However, it was still a state monopoly. Fellow merchants resented its power and ambitious courtiers plotted to appropriate a share of its profits (p.25).

What did mercantilists accuse the company of? What did the government ban in 1700?

What did the company become deeply involved in? Why is this important?

Robert Clive of India (1725 – 1774) was decisive figure in evolution of the Company. He recaptured Calcutta and vanquished the Nawab of Bengal at the Battle of Plassey. He also had an English victory of the Moghul emperor at Buxar in 1764 which secured the Company’s control over Bengal. There was some malpractice from Clive and he committed suicide. Warren

37

Hastings, the first official governor-general of India and the architect of tighter British control of Moghul Empire, was impeached by parliament (p.26-27).

Amongst the scandal, how did Clive and Hastings transform the company? What decision was made in 1773?

A boycott was launched by a consumer named Elizabeth Heyrick. What was it concerning?

Described what happened when the Company renewed its license. How did this contribute to its downfall?

Robert Clive, 1st Baron CliveFrom Wikipedia, the free encyclopedia

  

The Lord Clive

Lord Clive

BornSeptember 29, 1725

Shropshire

DiedNovember 22, 1774 (aged 49)

Berkeley Square

38

Nationality British

Other names Clive of India

Occupation Soldier, Colonial administrator, Politician

Known for Establishing a British colony of India

Major-General Robert Clive, 1st Baron Clive, KB (29 September 1725 – 22 November 1774), also known as Clive of India, was a British soldier who established the military and political supremacy of the East India Company in Southern India and Bengal. He is credited with securing India, and the wealth that followed, for the British crown.[1] Together with Warren Hastings he was one of the key figures in the creation of British India. He also razed and rebuilt a Surrey mansion called Claremont.

Reference: Wikipedia http://en.wikipedia.org/wiki/Robert_Clive

Warren HastingsThe Right Honourable

 Warren Hastings PC

First Governor-General of India

In office1773–1785

Preceded by None

39

Succeeded by Sir John Macpherson, acting

Born 6 December 1732Churchill, Oxfordshire

Died 22 August 1818Daylesford, Gloucestershire

Nationality English

Warren Hastings PC (6 December 1732 – 22 August 1818) was the first Governor-General of India, from 1773 to 1785. He was famously accused of corruption in an impeachment in 1787, but was acquitted in 1795. He was made a Privy Councillor in 1814.

Reference: Wikipedia http://en.wikipedia.org/wiki/Warren_Hastings

Early joint-stock companies were instruments of rampant financial speculation as well as economic imperialism. During the early 18th century, the governments of France and Britain used 2 chartered companies (page 28).

What were the 2 chartered companies used by France and Britain? Why were they important?

Who was John Law and what does he have to do with these companies?

What happened to the Mississippi Company?

John Law (economist)John Law

40

John Law, by Casimir Balthazar

Born1671

Edinburgh

Scotland

Died21 March 1729 (aged 57)

Venice

Italy

Occupation Economist, Banker, Financier, Author.

Signature

John Law (usually pronounced Jean Lass by contemporary French people) (baptised 21 April 1671 – died 21 March 1729) was a Scottish economist who believed that money was only a means of exchange that did not constitute wealth in itself and that national wealth depended on trade. He was appointed Controller General of Finances of France under King Louis XV.

In 1716 Law established the Banque Générale in France, a private bank, but three-quarters of the capital consisted of government bills and government-accepted notes, effectively making it the

41

first central bank of the nation. He was responsible for the Mississippi Bubble and a chaotic economic collapse in France.

Law was a gambler and a brilliant mental calculator. He was known to win card games by mentally calculating the odds. He originated economic ideas such as "The Scarcity Theory of Value" and the "Real bills doctrine"..

Reference: Wikipedia http://en.wikipedia.org/wiki/John_Law_%28economist%29

The drama of the South Sea Company did not quite reach the heights of the Mississippi Company (page 31).

How did the South Sea Company differ from the Mississippi Company in this way? On page 32, Micklethwait and Wooldridge state, There was widespread disbelief that

public debt needed to be retired as quickly as possible. The country was in a europhoric mood buoyed by military successes against the French. Why is this significant information? Do you think this still happens today?

What is the Bubble Act of June 11, 1720 and why is it significant?

Micklethwait and Wooldridge state that these organizations raised problems in the beginning. Sir Edward Coke (1552 – 1634) complained that they cannot commit treason, nor be outlawed or excommunicated, for they have no souls (p.33). Two centuries later,Lord Chancellor, Edward Thurlow (1731 – 1806) stated, Corporations have neither bodies to be punished, nor souls to be condemned, they therefore do as they like (p. 33). However, Micklethwait and Wooldridge believe that the loss of thousands of investors money with the South Sea and Mississippi Companies are still not as bad as chartered companies which pioneered slavery.

Do you agree with Coke and Thurlow or Micklethwait and Wooldridge or all men, discuss.

What happened in 1619 and the Virginia Company?

What was Adam Smith’s complaints about the East India Company’s abuses in Bengal?

Edward CokeFrom Wikipedia, the free encyclopedia

Sir Edward Coke 

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Sir Edward Coke (pronounced "Cook") (1 February 1552 – 3 September 1634) was a seventeenth-century English jurist and Member of Parliament whose writings on the common law were the definitive legal texts for nearly 150 years. Born into a family of minor Norfolk gentry, Coke travelled to London as a young man to make his living as a barrister. There he rapidly gained prominence as one of the leading attorneys of his time, eventually being appointed Solicitor General and then Attorney General by Queen Elizabeth. As Attorney General, Coke famously prosecuted Sir Walter Raleigh and the Gunpowder Plot conspirators for treason. In 1606, Coke was made Chief Justice of the Court of Common Pleas, later being elevated, in 1613, to Lord Chief Justice of England. As a judge, Coke delivered numerous important decisions, and he gained a reputation as the greatest jurist of his age.[1] Nonetheless, his unwillingness to compromise in the face of challenges to the supremacy of the common law made him increasingly unpopular with James I, and he was eventually removed as Lord Chief Justice in 1616.

Despite his dismissal from the bench and his already advanced age, Coke remained an influential political figure, leading parliamentary opposition to the Crown in the 1620s. His career in parliament culminated in 1628 when he acted as one of the primary authors of the Petition of Right. This document reaffirmed the rights of Englishmen and prevented the Crown from infringing them.

Coke's enduring fame and importance rests principally on his immensely influential legal writings and on his staunch defence of the rule of law in the face of royal absolutism. His legal texts formed the basis for the modern common law, with lawyers in both England and America learning their law from his Institutes and Reports until the end of the eighteenth century. As a judge and Member of Parliament, Coke supported individual liberty against arbitrary government and sought to ensure that the king's authority was circumscribed by law. In later times, both English reformers and American Patriots, such as John Lilburne, James Otis, and John Adams, used Coke's writings to support their conceptions of inviolable civil liberties.

Reference: Wikipedia http://en.wikipedia.org/wiki/Sir_Edward_Coke

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Edward Thurlow, 1st Baron Thurlow

An 1803 portrait of Edward Thurlow by Thomas Lawrence

Edward Thurlow, 1st Baron Thurlow, PC (9 December 1731 – 12 September 1806) was a British lawyer and Tory politician. He served as Lord Chancellor of Great Britain for fourteen years and under four Prime Ministers.

Reference: Wikipedia http://en.wikipedia.org/wiki/Edward_Thurlow,_1st_Baron_Thurlow

Adam SmithFrom Wikipedia, the free encyclopedia

Adam Smith

44

Full name Adam Smith

Born16 June 1723

(OS: 5 June 1723)

Kirkcaldy, Fife, Scotland

Died17 July 1790 (aged 67)

Edinburgh, Scotland

EraClassical economics

(Modern economics)

Region Western philosophy

School Classical economics

Main interests Political philosophy, ethics, economics

Notable ideas

Classical economics,

modern free market,

division of labour,

the "invisible hand"

Signature

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Adam Smith (baptised 16 June 1723 – died 17 July 1790 [OS: 5 June 1723 – 17 July 1790]) was a Scottish moral philosopher and a pioneer of political economics. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations. The latter, usually abbreviated as The Wealth of Nations, is considered his magnum opus and the first modern work of economics. Smith is widely cited as the father of modern economics.

Smith studied moral philosophy at the University of Glasgow and the University of Oxford. After graduating, he delivered a successful series of public lectures at Edinburgh, leading him to collaborate with David Hume during the Scottish Enlightenment. Smith obtained a professorship at Glasgow teaching moral philosophy, and during this time he wrote and published The Theory of Moral Sentiments. In his later life, he took a tutoring position that allowed him to travel throughout Europe, where he met other intellectual leaders of his day. Smith returned home and spent the next ten years writing The Wealth of Nations, publishing it in 1776. He died in 1790.

Reference: Wikipedia http://en.wikipedia.org/wiki/Adam_smith

Chapter 3: A Prolonged and Painful Birth 1750 – 1862 (p.37 – 54)

In this chapter, Micklethwait and Wooldridge discuss the slave trade, start of industrialization and rise of the British and American company.

How was the slave trade operated? Discuss any current connections, you can think of modern day slavery to the slave trade

discussed in this chapter, with regards to how it operated, who it involves, why it happened.

Discuss the exporting of slaves and exporting of crops from Wright’s book to the slave trade discussed in this book based on Micklethwait and Wooldridge’s perspectives.

Can you find any problems with the industrial system, where industrialists were able to keep ownership and management of their business in small circles?

What were some of the new infrastructures in America? How were they built?

What types of companies were the most important in America?

Discuss the “3 prompts of change” in America during the first half of the 19th century. Why is this important?

What was the 1844 Railway Act and why is it important?

Also on page 49, Micklethwait and Wooldridge discuss William Gladstone and how he pushed through the Joint-Stock Companies Act.

Describe the Joint-Stock Companies Act Walter Bagehot is mentioned on page 50, stating ...Were the rich, who thought the poor

would reap the biggest rewards. John Stuart Mill and Richard Cobden also argued that limited liability would help poor set up businesses. Discuss. Why is this significant? How

46

does this relate to modern day capitalist society, with regards to inequality amongst people?

Who is known as the ‘father of the modern company’? How did he change the company? Why is this significant?

On page 53, Micklethwait and Wooldridge claim, the company was a political creation.

Do you agree? Why or why not? On page 54, Micklethwait and Wooldridge ask: Is the company essentially a private

association, subject to the laws of the state but with no greater obligation than making money, or a public one which is supposed to act in the public interest?

This question was posed in the mid-1800’s and is still being asked today. What is your answer? Why?

Chapter 4: The Rise of Big Business in America 1862 – 1913 (pg. 55 – 78)

Micklethwait and Wooldridge begin this chapter discussing Richard Sears who began the company, Sears, with his partner Alvah Roebuck, specializing in jewellery and watches. In 1894, Sears, partnered with Julius Rosenwald and helped create many changes to the company.

What did Rosenwald do? Why was this important?

Richard Warren SearsFrom Wikipedia, the free encyclopedia.

Richard Warren Sears

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Born7 December 1863

Stewartville, Minnesota

DiedSeptember 28, 1914 (aged 50)

Waukesha, Wisconsin

Known for Founder of Sears, Roebuck and Company

Richard Warren Sears (7 December 1863 – 28 September 1914) was a manager, businessman, and the founder of Sears, Roebuck and Company with his partner Alvah C. Roebuck.

Reference Wikipedia http://en.wikipedia.org/wiki/Richard_Warren_Sears

Julius RosenwaldFrom Wikipedia, the free encyclopedia

Julius Rosenwald

Julius Rosenwald (August 12, 1862 – January 6, 1932) was a U.S. clothier, manufacturer, business executive, and philanthropist. He is best known as a part-owner and leader of Sears, Roebuck and Company, and for the Rosenwald Fund which donated millions to support the education of African American children in the rural South, as well as other philanthropic causes in the first half of the 20th century. He was also the principal founder and backer for the Museum

48

of Science and Industry in Chicago, to which he gave more than $5 million and served as President from 1927 to 1932.

Reference Wikipedia http://en.wikipedia.org/wiki/Julius_Rosenwald

On page 59, we read, By World War I giant corporations had become the dominant business institution in America: the gold standard by which all other enterprises were judged. On this page it is also stated that these businesses that were created during this period helped found modern America.

How did they become the dominant business institution? How did they help “found America?”

Do you think we can ever go back to ‘before the giant corporation?’

What was the first modern business? Why was it so important?

Who was Andrew Carnegie? What system did he introduce? How did Henry Ford change this system?

Andrew CarnegieFrom Wikipedia, the free encyclopedia

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Andrew Carnegie (properly pronounced /kɑrˈneɪɡi/ kar- NAY -gee , but commonly, /ˈkɑrnɨɡi/ KAR- nə -gee or /kɑrˈnɛɡi/ kar- NEH -gee )[1] (25 November 1835 – 11 August 1919) was a Scottish-American industrialist, businessman, entrepreneur and a major philanthropist.

Carnegie was born in Dunfermline, Scotland and migrated to the United States as a child with his parents. His first job in the United States was as a factory worker in a bobbin factory. Later, he became a bill logger for the owner of the company. Soon after he became a messenger boy. Eventually he progressed up the ranks of a telegraph company. He built Pittsburgh's Carnegie Steel Company, which was later merged with Elbert H. Gary's Federal Steel Company and several smaller companies to create U.S. Steel. With the fortune he made from business, he later turned to philanthropy and interests in education, founding the Carnegie Corporation of New York, Carnegie Endowment for International Peace, Carnegie Institution of Washington, Carnegie Mellon University and the Carnegie Museums of Pittsburgh.

Carnegie donated most of his money to establish many libraries, schools, and universities in America, the United Kingdom and other countries, as well as a pension fund for former employees. He is often regarded as the second-richest man in history after John D. Rockefeller. Carnegie started as a telegrapher and by the 1860s had investments in railroads, railroad sleeping cars, bridges and oil derricks. He built further wealth as a bond salesman raising money for American enterprise in Europe.

He earned most of his fortune in the steel industry. In the 1870s, he founded the Carnegie Steel Company, a step which cemented his name as one of the "Captains of Industry". By the 1890s, the company was the largest and most profitable industrial enterprise in the world. Carnegie sold it to J.P. Morgan in 1901, who created U.S. Steel. Carnegie devoted the remainder of his life to large-scale philanthropy, with special emphasis on local libraries, world peace, education and scientific research. His life has often been referred to as a true "rags to riches" story.

Reference Wikipedia http://en.wikipedia.org/wiki/Andrew_Carnegie

On page 65, Micklethwait and Wooldridge state that at the turn of the century, integrated companies dominated America’s most vital industries.

How did this change the company? What are some problems, in your opinion, that may occur with mergers like this?

Do you think mergers are a good idea, why or why not?

There are 2 people ‘synonymous’ with the trust era. Describe the ‘trust’ era and the people and their companies associated with this period in time. Why were these people important?

50

On page 72, Micklethwait and Wooldridge state, as the new companies changed society, society changed the companies.

Discuss this quote. What happened at Carnegie’s US Steel Plant in Homestead, Pennsylvania? After

another strike occurred union membership multiplied. Do you believe unions are essential for protecting workers’ rights, or do you think they are not necessary in business?

On page 74, Micklethwait and Wooldridge state that most Americans were ambivalent about business. They disliked concentrations of corporate power and disliked the wealth of businessmen.

What were the 3 things that kept ambivalence about corporations from tipping into hostility?

Do you still think this ambivalence exists today?

Chapter 5: The Rise of Big Business in Britain, Germany and Japan 1850 – 1950 (pg. 79 – 99)

In chapter 4, you read about the rise of corporations in America. This chapter discusses the rise of the company in three other areas of the world, and that reached huge levels based on different business models. These three areas are Britain, Germany and Japan.

Micklethwait and Wooldridge explain how Britain was reluctant to convert to companies. However, it did lead the way in industrialization, development in large firms and pioneered in setting companies free from state control.

Who was the largest British employer? On page 82, Micklethwait and Wooldridge state, There are plenty of reasons for Britain’s

failure to capitalize on its head start. What were these reasons?

On page 83, we learn that when British firms finally emerged they were more successful than those of the American firms, because they were longer lasting and more profitable. However, there was still a problem. What was this problem? Why is this important?

What was the perspective about business in Britain between the wars? Why is this important to the history of the company?

How did the company change British life? Was it positive or negative?

What type of “boom” occurred after World War I? Why was this important?

On page 90, Micklthwait and Wooldridge state, during the late 19th century the finest examples of the “new economy” in Europe were all in Germany.

51

What was the model of capitalism used by German businesses? How does it differ from American companies?

Who was Friedrich List? Why is he mentioned?

Friedrich ListFrom Wikipedia, the free encyclopedia

Georg Friedrich List (August 6, 1789 – November 30, 1846) was a leading 19th century German economist who developed the "National System" or what some[2] would call today the National System of Innovation. He was a forefather of the German historical school of economics,[3] and considered the original European unity theorist[4] whose ideas were the basis for the European Economic Community.[5]

Stamp

He was born at Reutlingen, Württemberg. Unwilling to follow the occupation of his father, who was a prosperous tanner, he became a clerk in the public service, and by 1816 had risen to the post of ministerial under-secretary. In 1817, he was appointed professor of administration and politics at the University of Tübingen, but the fall of the ministry in 1819 compelled him to resign. As a deputy to the Württemberg chamber, he was active in advocating administrative

52

reforms. He was eventually expelled from the chamber and in April 1822 sentenced to ten months' imprisonment with hard labor in the fortress of Asperg. He escaped to Alsace, and after visiting France and England returned in 1824 to finish his sentence, and was released on undertaking to emigrate to America. There he resided from 1825 to 1832, first engaging in farming and afterwards in journalism.

It was in America that he gathered from a study of Alexander Hamilton's work the inspiration which made him an economist of his pronounced "National System" views which found realization in Henry Clay's American System. The discovery of coal on some land which he had acquired made him financially independent. In 1832, he became United States consul at Leipzig. He strongly advocated the extension of the railway system in Germany, and the establishment of the Zollverein (German customs union), which unified Germany economically, was due largely to his enthusiasm and ardour. In 1841, "List was offered the post of Editor of the Rheinische Zeitung, a new liberal paper which was being established in Cologne. But he declared that ill-health prevented him from accepting the post — which eventually went to Karl Marx."[6] His latter days were darkened by many misfortunes; he lost much of his American property in a financial crisis, ill-health also overtook him, and killed himself on the 30th of November, 1846.[7

Reference Wikipedia http://en.wikipedia.org/wiki/Friedrich_List

The economic downturn of 1873 – 1893 helped force German companies together.

What is Interessengemeinschaften? What did the Nazi’s contribute to the German labour front?

Micklethwait and Wooldridge give 2 practical reasons why German companies succeeded. Explain.

On page 95, Micklethwait and Wooldridge begin to discuss the last area with big rise in business, Japan.

How did the Japanese business model differ from Britain and Germany? What is Zaibatsu?

What were leading Japanese industrial families remarkable at? Why is this important?

What happened with German and Japanese companies after World War II? What connections can you make to Wright’s ideas of progress with what happened to these companies.

From what we know about cultures based on Wright’s A Short History of Progress, what conclusions can you make about how these 3 different cultures changed the company?

53

ZaibatsuFrom Wikipedia, the free encyclopedia

Jump to: navigation, search

Marunouchi Headquarters for Mitsubishi zaibatsu, pre-1923

Zaibatsu (財閥?, literally plutocrats or financial clique) is a Japanese term referring to industrial and financial business conglomerates in the Empire of Japan, whose influence and size allowed for control over significant parts of the Japanese economy from the Meiji period until the end of World War II.

Terminology

Although zaibatsu existed from the 19th century, the term was not in common use until after World War I. By definition, the "zaibatsu" were large family-controlled vertical monopolies consisting of a holding company on top, with a wholly-owned banking subsidiary providing finance, and several industrial subsidiaries dominating specific sectors of a market, either solely, or through a number of sub-subsidiary companies.

Significance

The zaibatsu were the heart of economic and industrial activity within the Empire of Japan, and held great influence over Japanese national and foreign policies. The Rikken Seiyukai political party was regarded as an extension of the Mitsui group, which also had very strong connections with the Imperial Japanese Army. Likewise, the Rikken Minseito was connected to the Mitsubishi group, as was the Imperial Japanese Navy. By the start of World War II, the Big Four zaibatsu alone had direct control over more than 30% of Japan's mining, chemical, metals industries and almost 50% control of the machinery and equipment market, a significant part of the foreign commercial merchant fleet and 60% of the commercial stock exchange.

54

The zaibatsu were viewed with suspicion by both the right and left of the political spectrum in the 1920s and 1930s. Although the world was in the throes of a worldwide economic depression, the zaibatsu were prospering through currency speculation, maintenance of low labour costs and on military procurement. Matters came to a head in the League of Blood Incident of March 1932, with the assassination of the managing director of Mitsui, after which the zaibatsu attempted to improve on their public image through increased charity work.

History and development

The Big Four

The Big Four zaibatsu (四大財閥?, shidai zaibatsu) of Mitsubishi, Mitsui, Sumitomo and Yasuda are the most significant zaibatsu groups. Two of them, Mitsui and Sumitomo, have roots stemming from the Edo period while Mitsubishi and Yasuda trace their origins to the Meiji Restoration. Throughout Meiji to Showa, the government employed their financial powers and expertise for various endeavors, including tax collection, military procurement and foreign trade.

The new zaibatsu

Beyond the Big Four, consensus is lacking as to which companies can be called zaibatsu, and which cannot. After the Russo-Japanese War, a number of so-called "second-tier" zaibatsu also emerged, mostly as the result of business conglomerations and/or the award of lucrative military contracts. Some more famous second-tier zaibatsu included the Okura, Furukawa, and Nakajima groups, among several others.

The early zaibatsu permitted some public shareholding of some subsidiary companies, but never of the top holding company or key subsidiaries.

The monopolistic business practices by the zaibatsu resulted in a closed circle of companies until Japanese industrial expansion on the Asian mainland (Manchukuo) began in the 1930s, which allowed for the rise of a number of new groups (shinko zaibatsu), including Nissan. These new zaibatsu differed from the traditional zaibatsu only in that they were not controlled by specific families, and not in terms of business practices.

Reference Wikipedia http://en.wikipedia.org/wiki/Zaibatsu

Chapter 6: The Triumph of Managerial Capitalism 1913 – 1975 (pg. 100 – 121)

This chapter begins by discussing how the “big” company had become the defining institution in American society.

Why is this important to the history of business? Do you still believe this to be true in North American society?

Why was the multidivisional firm an important innovation according to Micklethwait and Wooldridge?

55

Who were the ‘company men’ and why are they important? Is this still relevant today?

Who is Alfred Sloan? Why is he called the ‘organization man?’

What is Sloanism? How did it change the company?

How did Neil McElroy from Procter and Gamble change his company? Do you think businesses today have taken “brand management” too far in regards to marketing products?

Alfred P. SloanFrom Wikipedia, the free encyclopedia

Alfred P. Sloan

Cover of Time Magazine (December 27, 1926)

Alfred Pritchard Sloan, Jr. (May 23, 1875 – February 17, 1966) was a long-time president and chairman of General Motors.[1]

Biography

Sloan was born in New Haven, Connecticut. He studied electrical engineering and graduated from the Massachusetts Institute of Technology in 1895. While attending MIT he joined the Delta Upsilon fraternity.

He became president and owner of Hyatt Roller Bearing, a company that made roller and ball bearings, in 1899. For a brief period of time at the beginning of the 20th century, Ford Motor Company sourced bearings from Hyatt. In 1916 his company merged with United Motors Company which eventually became part of General Motors Corporation. He became Vice-

56

President, then President (1923), and finally Chairman of the Board (1937) of GM. In 1934, he established the philanthropic, nonprofit Alfred P. Sloan Foundation. GM under Sloan became famous for managing diverse operations with financial statistics such as return on investment; these measures were introduced to GM by Donaldson Brown, a protege of GM vice-president John J. Raskob who was in turn the protege of Pierre du Pont—the DuPont corporation owned 43% of GM.

Sloan is credited with establishing annual styling changes, from which came the concept of planned obsolescence. He also established a pricing structure in which (from lowest to highest priced) Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac—referred to as the ladder of success—did not compete with each other, and buyers could be kept in the GM "family" as their buying power and preferences changed as they aged. These concepts, along with Ford's resistance to the change in the 1920s, propelled GM to industry sales leadership by the early 1930s, a position it retained for over 70 years. Under Sloan's direction, GM became the largest and most successful and profitable industrial enterprise the world had ever known.[peacock term]

In the 1930s GM, long hostile to unionization, confronted its workforce, newly organized and ready for labor rights, in an extended contest for control. Sloan was averse to violence of the sort associated with Henry Ford. He preferred the subtle use of spying and had built up the best undercover apparatus the business community had ever seen up to that time.[peacock term][citation needed] When the workers organized the massive Flint Sit-Down Strike in 1936, Sloan found that espionage had little value in the face of such open tactics.

The world's first university-based executive education program—the Sloan Fellows—was created in 1931 at MIT under the sponsorship of Sloan. A Sloan Foundation grant established the MIT School of Industrial Management in 1952 with the charge of educating the "ideal manager", and the school was renamed in Sloan's honor as the Alfred P. Sloan School of Management, one of the world's premier business schools. Additional grants established a Sloan Institute of Hospital Administration Sloan Program in Health Administration in 1955 at Cornell University Cornell University-the first two year graduate program of its type in the US, a Sloan Fellows Program at Stanford Graduate School of Business in 1957, and at London Business School in 1965.[2] They became degree programmes in 1976, awarding the degree of Master of Science in Management. Sloan's name is also remembered in the Sloan-Kettering Institute and Cancer Center in New York. In 1951, Sloan received The Hundred Year Association of New York's Gold Medal Award "in recognition of outstanding contributions to the City of New York."

The Alfred P. Sloan Museum, showcasing the evolution of the automobile industry and traveling galleries, is located in Flint, MI.[3]

Sloan maintained an office in 30 Rockefeller Plaza in Rockefeller Center, now known as the GE Building.[5] He retired as GM chairman on April 2, 1956 and died in 1966.[1]

Mr. Sloan was inducted into the Junior Achievement U.S. Business Hall of Fame in 1975.

Reference Wikipedia http://en.wikipedia.org/wiki/Alfred_Sloan

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Neil H. McElroyFrom Wikipedia, the free encyclopedia

  

Neil H. McElroy

Neil Hosler McElroy (October 30, 1904 - November 30, 1972) was United States Secretary of Defense from 1957 to 1959 under President Eisenhower. He had been president of Procter & Gamble.

Early life

Born in Berea, Ohio, to school-teacher parents, McElroy grew up in the Cincinnati area. After receiving a bachelor's degree in economics from Harvard in 1925, he returned to Cincinnati to work in the advertising department of the Procter & Gamble Company. He advanced rapidly up the managerial ladder and became company president in 1948. Although a well known businessman, McElroy's only experience in the federal government prior to 1957 had been as chairman of the White House Conference on Education in 1955-56. Given his background in industry, and given President Eisenhower's predominance in defense matters, McElroy's appointment was not unusual. He spelled out his mandate the day he assumed office: "I conceive the role of the Secretary of Defense to be that of captain of President Eisenhower's defense team."

Reference Wikipedia http://en.wikipedia.org/wiki/Neil_McElroy

On page 109, Micklethwait and Wooldridge discuss the new culture of management.

What do they mean by ‘culture of management?’ How has this changed? What were some positive changes which occurred to the company? (Refer to Procter &

Gamble, Ford)

58

On page 111, 3 works were published in 1930 and 1940’s that asked questions about the ‘awkward institution.’ Why did companies exist? Whom were they run for? What about the workers?

Discuss these 3 questions in relevance to your own opinion and what you have read thus far

Do you believe these questions are still relevant to ask today?

On page 114, Micklethwait and Wooldridge state, one sign of the success of managerial capitalism is the way that it co-opted its state equivalent after 1945.

How did the relationship between management and labour differ between countries? (America and Western Europe?)

What was the ‘organization man?’

Chapter 7: The Corporate Paradox 1975 – 2002 (pg. 122 – 157)

This chapter begins to discuss the self-confident, self-indulgent companies of American capitalism.

What did Richard Nixon change about the company in 1971? What happened during the deregulatory revolution in Britain? What is significant about

this?

What happened in 1992 when Yeltsin privatized companies?

How did the publicly joint-stock companies keep its hold over capitalism?

Richard NixonFrom Wikipedia, the free encyclopedia.

Richard M. Nixon

59

37th President of the United States

Richard Milhous Nixon (January 9, 1913 – April 22, 1994) was the 37th President of the United States from 1969 to 1974, having formerly been the 36th Vice President of the United States from 1953 to 1961. A member of the Republican Party, he was the only President to resign the office as well as the only person to be elected twice to both the Presidency and the Vice Presidency.

Nixon was born in Yorba Linda, California. After completing his undergraduate work at Whittier College, he graduated from Duke University School of Law in 1937 and returned to California to practice law in La Habra. Following the attack on Pearl Harbor, he joined the United States Navy, serving in the Pacific theater, and rose to the rank of Lieutenant Commander during World War II. He was elected in 1946 as a Republican to the House of Representatives representing California's 12th Congressional district, and in 1950 to the United States Senate. He was selected to be the running mate of Dwight D. Eisenhower, the Republican Party nominee, in the 1952 Presidential election, becoming one of the youngest Vice Presidents in history. He waged an unsuccessful presidential campaign in 1960, narrowly losing to John F. Kennedy, and an unsuccessful campaign for Governor of California in 1962; following these losses, Nixon announced his withdrawal from political life. In 1968, however, he ran again for president of the United States and was elected.

The most immediate task facing President Nixon was a resolution of the Vietnam War. He initially escalated the conflict, overseeing incursions into neighboring countries, though American military personnel were gradually withdrawn and he successfully negotiated a ceasefire with North Vietnam in 1973, effectively ending American involvement in the war. His foreign policy initiatives were largely successful: his groundbreaking visit to the People's Republic of China in 1972 opened diplomatic relations between the two nations, and he initiated détente and the Anti-Ballistic Missile Treaty with the Soviet Union. On the domestic front, he

60

implemented the concept of New Federalism, transferring power from the federal government to the states; new economic policies which called for wage and price control and the abolition of the gold standard; sweeping environmental reforms, including the Clean Air Act and creation of the EPA; the launch of the War on Cancer and War on Drugs; reforms empowering women, including Title IX; and the desegregation of schools in the deep South. He was reelected by a landslide in 1972. He continued many reforms in his second term, though the nation was afflicted with an energy crisis. In the face of likely impeachment for his role in the Watergate scandal,[1] Nixon resigned on August 9, 1974. He was later pardoned by his successor, Gerald Ford, for any federal crimes he may have committed while in office.

In his retirement, Nixon became a prolific author and undertook many foreign trips. His work as an elder statesman helped to rehabilitate his public image. He suffered a debilitating stroke on April 18, 1994, and died four days later at the age of 81.

Reference Wikipedia http://en.wikipedia.org/wiki/Richard_Nixon

Boris YeltsinFrom Wikipedia, the free encyclopedia

  

Boris Nikolayevich YeltsinБорис Николаевич Ельцин

Birth name Boris Nikolayevich Yeltsin

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Boris Nikolayevich Yeltsin (Russian: Бори́с Никола́евич Е́льцин, IPA: [bɐˈrʲis nʲɪkɐˈlaɪvʲɪtɕ ˈjelʲtsɨn]  ( listen); 1 February 1931 – 23 April 2007) was the first President of the Russian Federation, serving from 1991 to 1999.

Boris Yeltsin came to power with a wave of high expectations. On 12 June 1991 he was elected president of the Russian Soviet Federative Socialist Republic with 57% of the vote, becoming the first popularly elected president. However, Yeltsin never recovered his popularity after a series of economic and political crises in Russia in the 1990s.

Following the dissolution of the Soviet Union in December 1991, Yeltsin, vowing to transform Russia's socialist command economy into a free market economy, endorsed price liberalization and privatization programs. Due to the method of privatization, a good deal of the national wealth fell into the hands of a small group of people.[1]

In August 1991, Yeltsin won international plaudits for casting himself as a democrat and defying the August coup attempt of 1991 by the members of Soviet government opposed to further decentralisation under the Union Treaty of 1991. The Yeltsin era was marked by widespread corruption, economic collapse, and enormous political and social problems. During the first part of his rule, he ruled by decree. Later, his prime ministers effectively ran things. His confrontations with parliament climaxed in the October 1993 Russian constitutional crisis, during which Yeltsin illegally dissolved, besieged, and later shelled the Russian White House, killing hundreds. He then seized dictatorial powers, scrapped the constitution under which he had been legally removed from office, banned opposition parties and media, and deepened his economic experimentation. Later in 1993, Yeltsin imposed a new constitution with strong presidential powers, which was approved by referendum in December. He left office widely unpopular with the Russian population as an ineffectual and ailing autocrat.[2] By some estimates, his approval ratings when leaving office were two percent.[3]

Just hours before the first day of 2000, Yeltsin made a surprise announcement of his resignation, leaving the presidency in the hands of the Prime minister Vladimir Putin.

Reference Wikipedia http://en.wikipedia.org/wiki/Yeltsin

On page 129, Mickelthwait and Wooldridge state, big firms were much more likely than ever to go out of business; by 2000, roughly half of the biggest 100 industrial firms in 1974 had disappeared through takeovers or bankruptcy.

How did this effect society? (eg. Workers)

62

Why is this important to the history of business?

On page 132, Micklethwait and Wooldridge state, that there were 3 main people who played a role in unbundling the corporation.

Explain and describe each

On page 137, powers of big investments (mutual funds, hedge funds, junk bonds) were rising and were becoming more common.

Explain a leveraged buyout and junk bonds, how do they relate? Who was Michael Milken? What connections did he have to the bond market and Ronald

Reagan?

On page 142, company managers were continuously reminded, money goes where it wants and stays where it is well treated. What does this mean? Why is this significant?

Michael MilkenFrom Wikipedia, the free encyclopedia

Michael Robert Milken

Michael Robert Milken (born July 4, 1946) is an American financier and philanthropist noted for his role in the development of the market for high-yield bonds (also called junk bonds) during the 1970s and 1980s, for his 1990 guilty plea to multiple felony charges that he violated US securities laws and for his funding of medical research.[2]

Milken was indicted on 98 counts of racketeering and securities fraud in 1989 as the result of an insider trading investigation. After a plea bargain, he pled guilty to six securities and reporting

63

violations but was never convicted of racketeering or insider trading. Milken was sentenced to ten years in prison and permanently barred from the securities industry by the Securities and Exchange Commission. After the presiding judge reduced his sentence for cooperating with testimony against his former colleagues and good behavior, he was released after less than two years.[3]

His critics cited him as the epitome of Wall Street greed during the 1980s, and nicknamed him the Junk Bond King. Supporters, like George Gilder in his book, Telecosm, note that "Milken was a key source of the organizational changes that have impelled economic growth over the last twenty years. Most striking was the productivity surge in capital, as Milken … and others took the vast sums trapped in old-line businesses and put them back into the markets."

Milken has also been engaged in philanthropic activities since the early 1980s. He is co-founder of the Milken Family Foundation, chairman of the Milken Institute, and founder of medical philanthropies funding research into melanoma, cancer and other life-threatening diseases. In a November 2004 cover article, Fortune magazine called him "The Man Who Changed Medicine" for his positive influence on medical research.[4]

With an estimated net worth of around $2.1 billion as of 2007, he is ranked by Forbes magazine as the 458th richest person in the world.[1]

Reference Wikipedia http://en.wikipedia.org/wiki/Michael_Milken

Ronald ReaganFrom Wikipedia, the free encyclopedia

Ronald Reagan

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Ronald Wilson Reagan (February 6, 1911 – June 5, 2004) was the 40th President of the United States (1981–1989) and the 33rd Governor of California (1967–1975).[1]

Born in Tampico, Illinois, Reagan moved to Los Angeles, California in 1937. He began a career as an actor, first in films and later television, appearing in over fifty movie productions and gaining enough success to become a famous man. Some of his most notable roles are in Knute Rockne, All American and Kings Row. Reagan served as president of the Screen Actors Guild, and later spokesman for General Electric (GE); his start in politics occurred during his work for GE. Originally a member of the Democratic Party, he switched to the Republican Party in 1962. After delivering a rousing speech in support of Barry Goldwater's presidential candidacy in 1964, he was persuaded to seek the California governorship, winning two years later and again in 1970. He was defeated in his run for the Republican presidential nomination in 1968 as well as 1976, but won both the nomination and election in 1980.

As president, Reagan implemented sweeping new political and economic initiatives. His supply-side economic policies, dubbed "Reaganomics", advocated controlling the money supply to reduce inflation, and spurring economic growth by reducing tax rates, government regulation of the economy, and certain types of government spending. In his first term he survived an assassination attempt, took a hard line against labor unions, and ordered military actions in Grenada. He was reelected in a landslide in 1984, proclaiming it was "Morning in America". His second term was primarily marked by foreign matters, such as the ending of the Cold War, the bombing of Libya, and the revelation of the Iran-Contra affair. Publicly describing the Soviet Union as an "evil empire",[2] he supported anti-Communist movements worldwide and spent his first term forgoing the strategy of détente by ordering a massive military buildup in an arms race with the USSR. Reagan negotiated with Soviet General Secretary Mikhail Gorbachev, culminating in the INF Treaty and the decrease of both countries' nuclear arsenals.

Reagan left office in 1989. In 1994, the former president disclosed that he had been diagnosed with Alzheimer's disease earlier in the year; he died ten years later at the age of 93. He ranks highly in public opinion polls of U.S. Presidents.

Reference Wikipedia http://en.wikipedia.org/wiki/Ronald_Reagan

o

On page 143, Micklethwait and Wooldridge discuss the story of Silicon Valley.

What is Silicon Valley? How did the Japanese affect Silicon Valley technology? What changes occurred?

65

In this section of the book, it discusses how Silicon Valley changed the Company. How did it do this? Are these changes still seen in modern companies today?

Silicon ValleyFrom Wikipedia, the free encyclopedia

A view of downtown San Jose, the self-proclaimed "Capital of Silicon Valley"

Silicon Valley is in the southern part of the San Francisco Bay Area in Northern California, United States. The region is home to many of the world's largest technology companies including Apple, Google, Facebook, HP, Intel, Cisco, eBay, Adobe, Agilent, Oracle, Yahoo, Netflix, and EA.[1] The term originally referred to the region's large number of silicon chip innovators and manufacturers, but eventually came to refer to all the high-tech businesses in the area; it is now generally used as a metonym for the American high-tech sector. Despite the development of other high-tech economic centers throughout the United States and the world, Silicon Valley continues to be the leading hub for high-tech innovation and development, accounting for 1/3 of all of the venture capital investment in the United States.[2] Geographically, the Silicon Valley encompasses all of the Santa Clara Valley including the city of San Jose (and adjacent communities), the southern Peninsula, and the southern East Bay.

Origin of the term

The term Silicon Valley was coined by Ralph Vaerst, a Central California entrepreneur. Its first published use is credited to Don Hoefler, a friend of Vaerst's, who used the phrase as the title of a series of articles in the weekly trade newspaper Electronic News. The series, entitled "Silicon Valley in the USA," began in the paper's issue dated January 11, 1971.[3] Valley refers to the Santa Clara Valley, located at the southern end of San Francisco Bay, while Silicon refers to the high concentration of companies involved in the semiconductor (silicon is used to create most semiconductors commercially) and computer industries that were concentrated in the area. These firms slowly replaced the orchards which gave the area its initial nickname, the Valley of Heart's Delight.

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History

"Perhaps the strongest thread that runs through the Valley's past and present is the drive to "play" with novel technology, which, when bolstered by an advanced engineering degree and channeled by astute management, has done much to create the industrial powerhouse we see in the Valley today."[4]

Looking west over northern San Jose (downtown is at far left) and other parts of Silicon Valley

Since the early twentieth century, Silicon Valley has been home to a vibrant, growing electronics industry. The industry began through experimentation and innovation in the fields of radio, television, and military electronics. Stanford University, its affiliates, and graduates have played a major role in the development of this area.[5]

A powerful sense of regional solidarity accompanied the rise of Silicon Valley. From the 1890s, Stanford University's leaders saw its mission as service to the West and shaped the school accordingly. At the same time, the perceived exploitation of the West at the hands of eastern interests fueled booster-like attempts to build self-sufficient indigenous local industry. Thus, regionalism helped align Stanford's interests with those of the area's high-tech firms for the first fifty years of Silicon Valley's development.[6]

During the 1940s and 1950s, Frederick Terman, as Stanford's dean of engineering and provost, encouraged faculty and graduates to start their own companies. He is credited with nurturing Hewlett-Packard, Varian Associates, and other high-tech firms, until what would become Silicon Valley grew up around the Stanford campus. Terman is often called "the father of Silicon Valley."[7]

During 1955-85, solid state technology research and development at Stanford University followed three waves of industrial innovation made possible by support from private corporations, mainly Bell Telephone Laboratories, Shockley Semiconductor, Fairchild Semiconductor, and Xerox PARC. In 1969 the Stanford Research Institute operated one of the four original nodes that comprised ARPANET, predecessor to the Internet.[8]

Reference Wikipedia http://en.wikipedia.org/wiki/Silicon_Valley

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On page 146, Micklethwait and Wooldridge discuss the loss of confidence to businesses by using the rise of the management-theory industry.

Why was confidence lost? This form of business is stated as a ‘cult’ on page 147. Explain. Can you make any

connections to Wright’s suggestions of culture?

What was important about Philadelphia?

How did women affect the ‘company man.’

In 2002, how did society feel about companies? During this time governments had a stronger hold on the company, can you compare this with any of the civilizations described in Wright’s A Short History of Progress?

On page 151, Micklethwait and Wooldridge discuss scandals such as, Enron.

Can you make any connections to the collapse of Enron, (or any of the other company examples) to the collapse of any of the civilizations mentioned in Wright’s book? Discuss any similarities or differences you might have found.

Discuss the explanations given by Micklethwait and Wooldridge of what went wrong.

Chapter 8: Agents of Influence: Multinationals 1850 – 2002 (pg. 160 – 179)

This chapter begins with a statement from Micklethwait and Wooldridge,

Multinationals have always aroused suspicion – from national elites (who have seen them as threats to their rightful authority) from conservative populists (who have condemned them as agents of cosmopolitanism) and later, from socialists (who have anathematized them as the highest stage of capitalism), p.161.

Discuss your thoughts

In poorer parts of the world, political power real or imagined, of rich-world companies can seem particularly intrusive. Even in rich countries, where the threat to state is non-existent, multinationals arouse suspicion, p.161.

Discuss what this quote means to you.

On page 162, Micklethwait and Wooldridge discuss the beginnings of the multinational.

Why were the railways so important? How does this reflect the experiment of agriculture, from Wright’s, A Short History of Progress?

How did the multinational change during the last quarter of the 19th century?

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Why was German multinationals more successful than Britain?

How did outsourcing affect the American multinational? Do you agree with this type of manufacturing? Why or why not?

Currently, there is a new trend to start ‘buying local,’ do you think this will make an impact on multinationals? Do you think they will change?

What is called the American secret weapon? Why is this important?

During the 1960’s, the American multinational was in its heyday, as Micklethwait and Wooldridge describe it (p. 171).

Why do they say this? What did critics think of the multinational?

In 1995, multinationals could come from anywhere. The top 100 companies by market valuation were, 43 from USA, 27 from Japan, 11 from Great Britain and 5 from Germany, (p.173). Canada was not included in this.

Micklethwait and Wooldridge describe 3 important changes that affect multinationals at this time. Explain.

On page 175, Micklethwait and Wooldridge argue that multinationals are not as harmful as critics state.

Discuss Do you agree or disagree?

Conclusion: The Future of the Company (pg. 181 – 191)

On page 182, Micklethwait and Wooldridge discuss the evolution of the company and how this has been the reason for its success. The authors describe 2 changes which will affect the company and us.

Describe the 2 changes

There is a quote from Teddy Roosevelt on page 182, which states, I believe in corporations , they are indispensable instruments of our modern civilization; but I believe that they should be so supervised and so regulated that they shall act for the interests of the community as a whole.

Do you think corporations are acting in the interests of the community as a whole? Why or why not?

Theodore RooseveltFrom Wikipedia, the free encyclopedia

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Theodore Roosevelt

Theodore "Teddy" Roosevelt (October 27, 1858 – January 6, 1919) pronounced /ˈroʊzəvɛlt/ [2] [3] ROE -zə-velt ) was the 26th President of the United States. He is noted for his energetic personality, range of interests and achievements, leadership of the Progressive Movement, and his "cowboy" image and robust masculinity.[4] He was a leader of the Republican Party and founder of the short-lived Progressive ("Bull Moose") Party of 1912. Before becoming President (1901–1909) he held offices at the municipal, state, and federal level of government. Roosevelt's achievements as a naturalist, explorer, hunter, author, and soldier are as much a part of his fame as any office he held as a politician.

Born to a wealthy family, Roosevelt was an unhealthy child suffering from asthma who stayed at home studying natural history. In response to his physical weakness, he embraced a strenuous life. He was home schooled and became a passionate student of nature. He attended Harvard, where he boxed and developed an interest in naval affairs. A year out of Harvard, in 1881 he ran for a seat in the state legislature. His first historical book, The Naval War of 1812, published in 1882, established his reputation as a serious historian. After a few years of living in the Badlands, Roosevelt returned to New York City, where he gained fame for fighting police corruption. He was effectively running the US Department of the Navy when the Spanish American War broke out; he resigned and led a small regiment in Cuba known as the Rough Riders, earning himself a nomination for the Medal of Honor (which was received posthumously

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on his behalf on January 16, 2001). After the war, he returned to New York and was elected governor; two years later he was elected Vice President of the United States.

In 1901, President William McKinley was assassinated, and Roosevelt became president at the age of 42, taking office at the youngest age of any U.S. President in history.[5] Roosevelt attempted to move the Republican Party in the direction of Progressivism, including trust busting and increased regulation of businesses. Roosevelt coined the phrase "Square Deal" to describe his domestic agenda, emphasizing that the average citizen would get a fair shake under his policies. As an outdoorsman and naturalist, he promoted the conservation movement. On the world stage, Roosevelt's policies were characterized by his slogan, "Speak softly and carry a big stick". Roosevelt was the force behind the completion of the Panama Canal; he sent out the Great White Fleet to display American power, and he negotiated an end to the Russo-Japanese War, for which he won the Nobel Peace Prize.[6] Roosevelt was the first American to win the Nobel Peace Prize.

Roosevelt declined to run for re-election in 1908. After leaving office, he embarked on a safari to Africa and a tour of Europe. On his return to the US, a bitter rift developed between Roosevelt and his anointed successor as President, William Howard Taft. Roosevelt attempted in 1912 to wrest the Republican nomination from Taft, and when he failed, he launched the Bull Moose Party. In the election, Roosevelt became the only third party candidate to come in second place, beating Taft but losing to Woodrow Wilson. After the election, Roosevelt embarked on a major expedition to South America; the river on which he traveled now bears his name. He contracted malaria on the trip, which damaged his health, and he died a few years later, at the age of 60. Roosevelt has consistently been ranked by scholars as one of the greatest U.S. Presidents.

Reference Wikipedia http://en.wikipedia.org/wiki/Teddy_Roosevelt

On page 182, Micklethwait and Wooldridge describe 3 different futures for the company, based on an economic standpoint.

What are these 3 different futures? Are these positive or negative factors?

Do you agree?

In Wright’s A Short History of Progress, he states, that on an economic level, we are one big civilization. How does his “economic” perspective differ from that of Mickelthwait and Wooldridge?

On page 185, Micklethwait and Wooldridge state, the trend at the moment is for the corporation to become ever less “corporate” for bigger organizations to break themselves down into smaller entrepreneurial units.

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With this being said, do you think the big corporation has hit a “progress trap?” (Maybe that’s why it is breaking into smaller units?)

The next subtitle, on page 185, is called A Franchise Under Threat.

Discuss what Mickelthwait and Wooldridge describe are the threats to the company. How does this threat to progress reflect the threat of environmental damage/climate

change to progress described in Wright’s A Short History of Progress?

On page 190, Micklethwait and Wooldridge state, the problem in the future may stem less from what companies do to society than from what society does to companies.

What does this mean to you? Do you agree with Mickelthwait and Wooldridge?

On page 191, Micklethwait and Wooldridge state, In a world of limitless choice, no company can rely on a secure future.

Do you believe we have “limitless” choice in the world today, as they are stating? What would Wright’s perspective be?

What do you think is the future of the company?