Browsing by Author "Maphosa, Lloyd Melusi"

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    A historical analysis of joint stock companies in the Cape Colony between 1892 and 1902
    (Stellenbosch : Stellenbosch University, 2021-03) Maphosa, Lloyd Melusi; Fourie, Johan; Ehlers, Anton; Kerby, Edward; Stellenbosch University. Faculty of Arts and Social Sciences. Dept. of History.
    ENGLISH ABSTRACT: The promulgation of laws sanctioning the use of limited liability joint stock companies during the nineteenth century has been linked to economic growth in Europe and North America. These legal changes minimised transaction costs in business practices, which in turn encouraged entrepreneurial innovation, and expanded the capital market. This is because as companies multiplied, income distribution improved, thereby increasing the amount of savings available for companies from which to pool capital. Despite similar legal changes in frontier markets such as South Africa, very few attempts have been made to analyse these outcomes. In South African history, although companies feature in broader economic history studies and micro-firm studies, attempts to analyse their long-term impact remain under explored. In the few studies that examine their growth, attention has either been on their distribution in the period prior to the legal changes, or generally on their legal framework. This study aims to add to this body of knowledge by analysing the impact of the Cape Joint Stock Company Act of 1892 on company growth and the private capital market. It is the first study to use company micro-data to assess the distribution of companies and investors in colonial South Africa. It examines the sectors in which these companies were engaged, their geographic location, size, average lifespan, and the individuals who financed them. The analysis shows that there was a substantial increase in the number of companies engaged in various sectors of the economy between 1892 and 1902. In this significant feat of colonial business, the middle-class constituted 31% of the capital market, and had the highest percentage of individuals registered as starting members of companies. This meant that they were not only the largest source of capital, but were at the helm of entrepreneurial innovation. Within this dynamic, women towards the end of the nineteenth century became regular participants in the private capital market, despite strong cultural institutions that prohibited them from many economic activities. Farmers, despite being the second largest group in the capital market, had the lowest capital value by contrast. Proposed explanations for this are that women used the securities market to exercise economic freedom, while farmers used it to salvage the agricultural sector that had been scourged by environmental disasters. This is because during this period there was a growing ideology that supported women’s independence. Also, farmers, unlike other investor groups that spread their investments, channelled most of their finances towards agricultural companies. Therefore, the nature of joint stock companies during this period and the diversity of the capital market show that the Company Act of 1892 had a profound economic impact on the Cape Colony.