The largest objections to anarchy from statists is, from their perspective, a lack of solutions for those who are less wealthy or more apt to be taken advantage of by others. They claim that government health care, for instance, is necessary because those less fortunate or less wealthy will not be able to afford health care. However, we know that the free market provided almost universal health care at extremely low cost prior to government intervention. Sadly, because statists do not read history, they cry for more government to fix what government broke in the first place.

Likewise, statists cry that government needs to ‘regulate’ risky behavior so that those less savvy are not taken advantage of by others. But contracts have always been a solution integral to the free market, and the joint stock company, also called a joint stock partnership, was one of those free market solutions even those without business savvy used to protect their interests in risky situations where being taken advantage of could have been a real problem.

A joint stock company is not a ‘company’ as we think of them today, they were not a government-created entity where one applied for permission to run a business; they were more of a formal contract, declared publicly by publishing its articles in a newspaper, with the intent of protection and not necessarily the running of a business at all.

Joint Stock Companies in the Gold Rush

While certainly not the first use of the joint stock company, during the California Gold Rush, thousands of joint stock companies were formed by both sea and overland travelers who intended to make their fortunes in the foothills of the Sierra Nevada mountains. The general way that a joint stock company worked is exemplified by some of the published articles found in various newspapers in several of the eastern states where the companies set out to the goldfields.

As one of the articles published in 1849 spelled out*, the companies were formed “for the purpose of mutual safey and advantage in prosecuting an overland route to California”. These people were not stupid. They knew there were serious risks in joining with others on such an endeavor, particularly in joining with strangers, but they also knew that such an incredibly dangerous undertaking could not be accomplished without cooperation. From the joint stock company, they sought the best of both worlds: engaging in voluntary cooperation to help them on their journey, while also mitigating their risk to the greatest extent possible.

Each member paid a specific amount into the company Treasury, $85 in the case of the articles mentioned above, which purchased initial supplies and paid expenses along the route. In order to protect their monies, an agent was elected by the company who would be responsible for purchasing supplies. Since it would have been easy for him to take off with the entire group’s money, the agent then was required to purchase a bond to ensure the members got their money back in case he skipped town.

Joint Stock Company Man Panning for Gold

Interestingly, the articles of the company even specified rules for proper behavior for its members, including being, again using the previously mentioned articles, “orderly, temperate, and faithful- obedient to the will of the majority…”. A voluntary democratic association that even specified the terms for ‘retiring’ from the company.

It was all a very well-thought out and very effective way to protect the members of a party entering into high-risk adventures where, without such a company, it would have been easy for someone to take advantage of the rest. With the clever solution of a public joint stock company, however, it made these potentially risky endeavors far less risky for the ‘average Joe’. Statists may decry the lack of solutions for very real problems that people may encounter without the state, however, their belief is predicated on lack of reading history, and not a lack of free-market solutions.

The joint stock company is one such solution, having been used many times in history as protection from being taken advantage of without the need for a state, from as far back as ancient China in the Song Dynasty around 900 AD, and even by the Jamestown settlers in the (not yet) United States, to the Anarchy During the Gold Rush. If ancient people could figure out effective solutions for problems faced in absense or despite the state, today, modern technology like blockchain could only lead to the development of even better solutions to the problems that would be be inevitably faced in the absense of the state.

Kerri Knox is a registered nurse, hobby Austrian economist, world traveler and vociferous proponent of freedom who, when not writing about health on her websites, Easy Immune Health,  Side Effects Site, and Anemia Central , and managing the community advocacy site FQResearch.org, she is advocating for individual rights, liberty, and common sense.

 

*page 461 of the book ‘The World Rushed In, the California Gold Rush Experience’ by J. S. Holliday. Simon and Schuster