How the first multinational was hijacked by greed

In June 1773 Adam Smith was at home in Kirkaldy, Fife, hard at work on his Wealth of Nations, when an excited letter arrived from his fellow philosopher David Hume. ‘Do these events affect your theory?’ wrote Hume. ‘What say you?’

Smith was caught up in perhaps the third or fourth most serious stock market crash of all time. Shares in the East India Company — which, along with government stock, made up most of the market — had collapsed, bringing about 30 banks down with them. Smith had deposited his savings in the Ayr Bank and one of its customers who had borrowed to speculate on the market had disappeared. It was as if shares in BP, Shell, HSBC, Vodafone and GlaxoSmithKline had all dived at once, leaving Barclays and Lloyds TSB imperilled.

Smith was so incensed that much of his subsequent work was dedicated to attacking not just big government, but big corporations in general and the East India Company in particular.