For as long as there has been money in the world there have been those who have wanted to invest it, writes Edmund Conway in ‘50 Economics Ideas You Really Need to Know’ (www.landmarkonthenet.com). In the earliest days of financial investment, from the Renaissance in Italy to the seventeenth century, the main outlet for such cash was government bonds, but everything changed with the birth of the world’s first corporations, he traces. “They ushered in a world of shares, of speculation, of millions made and millions lost and, of course, the earliest stock market crashes.”
For starters, as the book narrates, the first recognisable company was the Virginia Company, set up to finance trade with colonists in America, but the first major corporation was the British East India Company, which had a government-granted monopoly on trade with British territories in Asia. Three ways in which these first companies set themselves apart from their predecessors (guilds, partnerships, and state-run enterprises) were in the way they raised money, the right given to shareholders to sell their shares, and the limiting of liability.
“The new companies issued shares or, as they are more often known today, equities. Unlike bonds, these give the shareholder formal ownership of a share in the company and, as such, much greater influence over its destiny…”
Starter material, written in an engaging style.
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