The Compagnie des Indes

By Howard Shakespeare


Published in print (with additional illustrations) in the Journal of the International Bond & Share Society, February 1997

Copyright ã International Bond & Share Society 2001


The 17th and 18th centuries saw the formation by various European countries of trading companies to exploit trade to Asia -  India, the East Indies, China. The earliest was the English East India Company (chartered in London, 1600). Later, similar companies were formed in France, Portugal, Spain, Austrian Netherlands, Sweden, Denmark and Prussia. Some were immensely succesful and long-lasting, others failed after just a few years.


Happily for us scripophilists, almost every one of these companies has left us shares, bonds or both, which are fascinating, although rarely decorative. The commonest material is that of the Keyserlijke Oostindische Compagnie, of Ostend (then Austrian Netherlands) ; many of its shares and option certificates have been known on the collectors’ market for years. Paper from all the other companies is rare – that of the Prussian Bengal Company was discovered only recently. Some early Netherlands pieces are known. The Spanish Filipinas share (by far the most decorative) is fairly easy to find. The Swedish and Danish are rare, with very few pieces, of a single type, known. The English, of different types, are all rare. The French Compagnie des Indes has probably the greatest variety of types of paper, although all are very rare, and most collectors never have seen a piece. It is those papers of the Compagnie des Indes that this article is devoted.


The First Voyages


The first French voyage to the Indies was in 1603, by Paulmier de Gonneville, of Honfleur. Almost immediately afterwards, in 1604, King Henri IV authorised the first Compagnie des Indes Orientales, with a 15-year monopoly of the Indies trade. It was formed by a Dieppe shipowner, Jean Ango, although the real spirit behind the company was a Fleming, Gérard de Roy. Things moved slowly, but by 1610 a small fleet had been bought, and prepared for sailing from St. Malo. Much of the investment and crewing was organised in Holland and Flanders, and this annoyed the Netherlands East India Co., which threatened to capture the French vessels, and hang any Flemings they found on board. Little more was heard of the company. Two further attempts were made to establish a further company, in 1615 and 1635, but although a few vessels were despatched in the 1640s, they amounted to very little. No shares or bonds have been seen.


The first major Compagnie dates from 1664, when the Compagnie des Indes Orientales was formed by Colbert, renowned finance minister to Louis XIV. The capital was 15 million livres, in shares of 1000 livres. The King subscribed the first 3 million livres, against which losses in the first 10 years were to be charged. All shares were sold : many courtiers felt it was in their own interests to support the King’s initiative. The company was granted a 50-year monopoly of French trade in the Indian and Pacific Oceans, from the Cape of Good Hope to the Straits of Magellan, with a concession in perpetuity for Madagascar and ‘all other islands and lands it could conquer’. It was required to build churches and train priests in its territories. Madagascar was not a success, and was soon abandoned, but ‘comptoirs’ were established in various parts of India from 1668, and at first did good business. However, by 1671 business was poor, and the maritime wars from 1672 brought ruin to the Company. It lost its monopoly in 1682, but struggled on until 1719, when it was formally dissolved.


The John Law Company, 1719


In 1717 the banker John Law founded the Compagnie d’Occident (or Compagnie du Mississippi), with a 25-year monopoly for exploitation of ‘Louisiane’ (the Mississippi-Missouri), and the Canadian beaver-skin trade. 1719 brought the absorption of the other French trading companies (Indes Orientales, Chine, Ste. Domingue, Afrique, Guinée and Sénégal), all of which were very weak. The combined company was named Compagnie des Indes, and this, primarily, is the company whose paper we see today.


This company held a monopoly for all French overseas trade, and (through its amalgamation with Law’s Banque Royale) the right to issue banknotes. New shares were sold for the enormous sum of 25 million livres each (for 550 livres payable in cash). A second and third issue was made. In 1720, at about the same time as the English ‘South Sea Bubble’, the price of the Indes shares was pushed up by speculators, rising to 4000% of par value, only to collapse, disastrously for most holders of the shares. The company was caught up in the 1721 bankruptcy of the Law structures, but survived, and reorganised in 1722. In 1723 it was granted fresh privileges by Louis XV. Among these were the monopoly of sale of tobacco and coffee, and the right to organise national lotteries. It raised fresh capital by issue of new shares and bonds. The Compagnie des Indes flourished from 1726 to 1746, paying handsome dividends, and bringing wealth to the ports of Bordeaux, Nantes, Marseille, and, in particular, its home port of Lorient (L’Orient), although it lost its rights in the western hemisphere. It established trading offices in many parts of India, also Canton, Yemen, Persia, Basra and North Africa. The main sources of its wealth were porcelain, wallpapers, lacquer and tea from China, cotton and silk cloth from China and India, coffee from Mocha (Yemen), pepper from Mahé (South India), gold, ivory and slaves from West Africa. After 1746 the spendthrift policies of the French Government began to hurt the Company, and the Seven Years War (1756-1763) brought severe losses of territory and ships. 1769 brought the suspension of all the Company’s monopoly trading rights, and in February 1770 an edict required the Company to transfer to the state all its properties, assets and rights (valued in total at 30 million livres), the King accepting to pay all the Company’s debts and annuity (rente) obligations. For this privelege, the holder of each of the 10,000 shares was required to pay 400 livres (much of this money was later used to finance the marriage of the Dauphin, later Louis XVI, to Marie Antoinette, in May 1770). The nominal value of each share was thus raised to 2500 livres, against which the state agreed to pay an annual dividend of 125 livres ; the market price of a share was about 700 livres, doubtless reflecting a lack of confidence in the payment of such dividends – previous dividends ‘promised’ for 150 livres per year fell to only 20 livres ! In fact, on all the pieces seen of this issue, no coupons have been cut for payment. The company was officially dissolved in 1770, although its liquidation dragged on into the 1790s.


New Company, 1785


A new Compagnie des Indes was formed by Louix XVI in 1785, with a capital of 40,000 issued shares of 1000 livres. It had a 7-year monopoly of trade with all points east of the Cape of Good Hope (excluding today’s Mauritius and Réunion). It owned 11 ships and made regular sailings to ports in India and China from its base at Lorient. It prospered until the National Assembly took away its privileges in 1790. The Company continued to trade, at much reduced level, until it was dissolved in 1794. Its liquidation was not complete until 1826.


Share certificates


No shares have been seen earlier than 1770. That year saw an issue of ‘actions’ by the 1719 Company, of nominal value 2500 livres, paying interest of 5%, secured on the tobacco monopoly, which had been taken from the Company by the state. Perhaps 3 full ‘actions’ of this issue are known at the time of writing, along with up to 10 certificates for 1/10th ‘action’. A certificate for 1/8th ‘action’, issued as late as 1787 was sold at auction in London in October 1996. This piece had circulated as a bill of exchange in Maritius and Réunion (from which, interestingly, the later (1785) Company was excluded). As the Company was no longer trading, these ‘actions’ (usually translated as shares), were not true shares at all, but actually represented State compensation to the Company’s shareholders for the confiscation of the Company’s assets and rights. (There are other cases where an ‘action’, usually translated as ‘share’, was in fact a fixed-interest obligation).

Perhaps 3 or 4 shares have been seen of the first (and probably only) issue by the 1785 company.


Bonds (‘Rentes’)


Different reference sources show different details of the issue of bonds or ‘rentes’. The true record appears to be as follows :


1724 brought an issue of bonds to serve as prizes in the Company’s lotteries. These worked as a tontine, whereby, as a holder died, half of his interest accrued to survivors drawn by lot. The capital value was probably 10 million livres, paying a rent of about 1 million livres per annum.


1748 saw an issue of 9 million livres of bonds to the State, paying 10%, to compensate the Company for loss of the tobacco monopoly in 1747. The annuities were paid from that same tobacco monopoly, presumably transferred to the Company by the State. An issue in 1748 of 1.2 million livres was probably part of the 9 million livres.


1765 saw a further bond issue, also of 9 million livres, and paying 10%, again to serve as prizes in a lottery organised by the Company.


February 1770 brought a last issue, of 12 million livres. By this time, the Company had ceased trading, and its dissolution had been announced. This was a State issue to enable the Company to liquidate its liabilities to its creditors.


To our knowledge, only the 1724, 1748 and 1765 issues are known to collectors. All are very rare, with only one or two examples known.


‘Amortissement’ Bonds

After the suspension of the Company’s monopoly trading rights, promissory notes issued by the Company in 1751, 1755 & 1764 were recalled and exchanged by the Royal Treasury in 1771 for bonds, clearly marked ‘Compagnie des Indes’. The Company was by now dissolved, and these debts were taken over by the State for amortisation. Only one such bond has been seen. Two interest receipts relating to these bonds, dated 1775 and 1781, are known.





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