HC Deb 17 May 1824 vol 11 cc766-75
Mr. Alderman Thompson

hoped, that Mr. Buxton would consent to postpone his motion on this subject at that late hour.

Mr. F. Buxton

said, he had no objection to bring in the bill then, and discuss the measure on the second reading.; but he would be guided by the opinion of the House.

Mr. Grenfell

objected to the bill, as having for its object to take away the rights of individuals, without giving them any compensation.

The House then calling on Mr. Buxton to go on,

Mr. Fowell Buxton

said, he would shortly describe to the House what the nature of the bill was; but, in the first instance he felt it necessary to state what the law was, as it now existed. At pre- sent, an individual who wished to insure a vessel could not go where he pleased to effect that insurance, but was reduced by the law to apply to one of two chartered companies. Now, he would ask his hon. friend, what good reason could be adduced in support of this restriction? What good reason could be given for confining insurances to one of two chartered companies, or to certain individuals at Lloyd's? While every other species of trade was conducted by firms, what reason, he demanded, could be advanced for crippling marine insurances by this restriction? [Hear.] A man might insure his life or his house wherever he pleased—a man might insure his ship, while building, or when in port, wherever he thought fit—but, when she proceeded to sea, when the risk was greatest, then, and then only, he was compelled to seek that insurance which perhaps he considered the least eligible. In many instances this system was productive of very great inconvenience and expense. For instance, if a merchant residing at Hull wished to insure a valuable cargo, he must first apply to his agent in London. That was attended with considerable expense. That agent applied to an insurance-broker; which was also attended with considerable expense. It was proved, before a committee of the House of Commons, on this subject, which sat in 1810, that the charges to which he had alluded, amounted to 25 per cent on the sum paid for insurance. The insurance-broker finally resorted to Lloyd's coffee-house. If he succeeded in getting the policy, it was underwritten by five-and-twenty or thirty persons. In the event of the vessel's being lost, the owner came upon the insurers. Some of them, however, were perhaps dead; and he had to employ an attorney and proceed against their representative. Some of them had perhaps become bankrupts; and he had again to employ an attorney and proceed against their assignees. Some of them were perhaps litigious, and once more he had to employ an attorney, for the purpose of carrying on an expensive lawsuit. Finally, he received only a dividend upon his undoubted right. Under the present system, then, the merchant had to contend against lawyers' charges, agents' charges, and brokers' charges: whereas, if the restriction were removed, all this expense and inconvenience would be removed with it [hear]. Surely the removal of such evils would be a matter of great national bene- fit. If the Hull or Liverpool or Bristol merchants were allowed to form companies for the purpose of insurance, they would, in the event of a vessel being lost, be relieved from those great legal difficulties, and that weight of expense, to which a man was necessarily exposed, when he had to settle an account with executors or assignees. He knew that a company might fail as well as individuals; but he felt that it was an occurrence far less likely to take place. If it were necessary, he could establish by the clearest evidence, every one of the difficulties he had described—every one of the positions he had laid down: and he was quite sure, that, by getting rid of delays and litigation—by getting rid of agents charges and of law expenses, they would open a new and extensive field for commerce in this country [hear].—There was one other point which he wished to press on the House at this moment; namely, that the effect of this measure would be, to bring into this country a vast number of foreign insurances. There were at present some foreign insurances effected in this country, but not nearly so many as would be effected if the restriction were removed. The great mercantile houses in England were perfectly well known on the continent; but that was not the case with those persons by whom the insurance business was carried on; and the foreign merchant, of course, did not like to trust to the responsibility of twenty or thirty individuals, who were not known: but it would be an inducement for him to bring his policy here, if he were assured of the respectability of the security offered. His honourable friend had said, that there were chartered companies, and that they possessed rights for which they had paid, and of which they ought not to be deprived. Now, he would state to the House how those charters had been obtained. In 1720, the civil list was considerably in arrear, and it was necessary to obtain a supply of money. The minister of that day found it impossible to tax the country further; and, in this state of things, the companies to which allusion had been made came forward with an offer of 600,000l., and, in consequence, obtained those charters. He must observe that, in the first place, they obtained them under false pretences. It was stated in the preamble of the bill, that those companies were necessary to promote the trade of the country; and that therefore parliament granted them certain immunities. Now, it would be seen that they had not promoted, but that they had injured, the trade of the country. His hon. friend said, they had a right to hold those privileges, because they had bought their charters. How stood the fact? They had agreed to pay 300,000l. a-piece, and it was agreed that if, in the course of thirty-one years, notice to that effect was given, those charters might be revoked, on the money being paid by the country; but that if they continued beyond thirty-one years, the money was not to be refunded. He demanded, whether those companies had enjoyed their stipulated thirty-one years? They had enjoyed their privileges for 104 years [hear]. The next question was, had they paid the amount bargained for? No; they had not. They had paid only 111,000l. instead of 300,000l. a piece. Having, therefore, only paid one-third of what they covenanted for, and having enjoyed their privileges for more than three times the length of the period mentioned, he did not think they had quite so strong a claim, as his hon. friend seemed to suppose. He really was at a loss to understand on what grounds his motion could be resisted; the object of his proposed bill being to give advantages or facilities, not to any particular individual, but to the whole trade of the kingdom. He would not detain the House longer on the present occasion, but merely move for leave to bring in a bill, "to repeal so much of the Act 6 Geo. III. c. 18, as restrains any other Corporations than those in the Act named, and any Societies or Partnerships, from effecting Marine Assurances, and lending money on Bottomry."

Mr. Plummer

said, the hon. gentleman had observed, that the privileges granted to those companies were confined to thirty-one years, and that they were then liable to be revoked. But he believed the fact was, that the grants were in perpetual succession, and subject to redemption. They could not be interfered with, unless the king, in council, notified that some inconvenience arose from them. In that case, the grants might be redeemed; but it was provided, in that event, that no similar privilege should be given to any other party. The hon. gentleman was also in error with respect to the sum of money advanced. Those two companies had paid the large sum of 150,000l. each, which was all that was required. They were originally asked for 300,000l. each; but, by the act of the government, the rest was remitted. Unless it was shown that these charters were injurious to the commerce of the kingdom, there was no ground for taking them away. To remove them would be, in fact, to interfere with private rights. It was stated, that parties wishing to effect insurances were not at liberty to go where they pleased. But, what bad consequences had resulted from this? Was it not perfectly easy to effect insurances either at Lloyd's coffeehouse, or at the office of those companies? Such a measure as that now proposed would destroy Lloyd's coffee-house. He believed insurances were effected there at a much lower rate than at any other place, and that those who went there found ample accommodation for every species of insurance. It was not now a question, whether it was right or wrong to grant those charters originally. They were in existence; and they could not, without injustice, be abrogated, unless it was shown that they operated prejudicially to the commerce of the country. Other companies, such as the Bank, and the East-India company, had also paid for their privileges; but the two insurance companies stood in a very different situation, and could not, consistently with justice, be meddled with. Until a proper case was made out against them, he hoped the justice of the House would interpose to prevent this measure from being carried into effect.

Mr. Alderman Thompson

said, that the hon. mover had complained that both at these insurance offices, and at Lloyd's great difficulty existed in effecting insurances, and in recovering the sums underwritten. But from the report of a committee of that House in 1810, it appeared, that no less than 681,800l. was insured on one ship at Lloyd's coffeehouse, and that, too, at a very moderate rate. The number of persons at Lloyd's who were connected with marine insurances was no fewer than 1,500; and he believed the amount of property insured there was not less than 200,000,000l. They had agents in every part of the world, from whom they received important commercial intelligence which they published freely to all. Now, if the business of insurance were thrown into the hands of a few corporate bodies, would it not be their object to get the largest premium possible: and in pursuance of that object would they not endeavour to conceal all information? The security would not foe so good as at present; since each shareholder would only be responsible for the amount of his subscription. If there were a petition from the merchants of London in favour of such a measure, that would be some reason for introducing it; but, that not being the case, the measure being uncalled for, and one which was likely to be prejudicial to the commerce of the country, he should certainly resist it.

Mr. Huskisson

expressed his regret that the subject was brought forward in the absence of the chancellor of the Exchequer, who, although his opinion was on record respecting the monoply in the hands of the two chartered companies, yet ought to have an opportunity of hearing all that could be said by the opponents of the measure. The chartered companies in question must have been founded on this principle—that it was desirable to give the public a greater security by the incorporation of companies, than they could enjoy by the conduct of the business of marine insurance by individuals. The first question therefore was, whether this main purpose had been answered? What proportion of the business had these companies monopolized? It appeared by the report of the committee of 1810, that of the whole business of marine insurance, they carried on only four parts in a hundred. It thus appeared, that not only ninety-six out of one hundred were deprived of that better security which the charter contemplated, but were deprived of the ordinary security which they would have enjoyed, if the charters had never existed—because, in that case, the insurers would have had the higher security of partnerships and joint-stock companies. The result therefore was, that, although four out of one hundred had the higher security of a corporation, ninety-six out of one hundred were in a much worse relative situation than they would otherwise have been. The advantage being so small, and the disadvantage so great, it certainly was competent to the legislature to inquire by what mode a correction of the inconvenience might be effected. The law by which the charters were granted, specified, that if within thirty-one years after the incorporation of the two companies it should be thought desirable to dissolve them, two years notice should be given of such a determination, and they should be repaid the sum they had advanced, namely, 150,000l. each: after which their charters should cease and determine, and never be revived. The law further declared, that if at any time after the thirty-one years, the charters should be considered injurious to the public interests, they should then be subject to be terminated, without any such payment. It was evident, therefore, that the companies had, at present, no claim for remuneration; and the only question was, whether it was consistent with policy, and with the benefit of the public, to continue their charters. There were four modes in which all commercial business might be conducted; by corporation, by partnerships, by joint-stock companies, or by individuals. Now, why was it that the business of marine insurance could be carried on advantageously only by the two extremes of these modes? A man applying to a respectable firm to insure his ship or cargo, would be told, "we cannot insure you collectively and as a partnership, but you may apply to any one of us individually for that purpose." Where was the wisdom of such a regulation? He had the greatest respect for the gentlemen at Lloyd's; they had always exhibited the most honourable conduct, and under circumstances of considerable difficulty had proved the character and resources of this country, in a manner highly creditable to themselves, and beneficial to the public. But, the question was, whether the interests of the public ought not to be attended to in the arrangement under consideration? It was said that that arrangement would destroy Lloyd's coffee- house, Unquestionably, the public would go wherever they could get their business done in the best and cheapest manner. And why, he begged to ask, ought they not to be permitted to do so? All that he said was—let the parties interested suit their own convenience and wishes. If, as he conceived, they would prefer insuring with corporations to insuring with individuals, then the two corporations, respecting which so much jealousy had been expressed, would still be likely to transact, as at present, four parts in the hundred of the business done, although they would lose their exclusive privileges; for, although those privileges would be terminated, the general charter would remain. And, with respect to joint-stock companies, he begged leave to say, that anxious as he was for fair competition on this, as well as on all other commercial subjects, he should not be disposed to grant to these companies exemption from being sued individually for the obligations which they might contract. In his opinion, his hon. friend had taken a right course in bringing the matter before parliament. It was not necessary for any persons desirous of the proposed alteration, to apply to the Crown, with regard to the charter. That charter would remain the same, with the exception of this single change.

Mr. Grenfell

observed, that he did not stand there to justify the system on which such charters had been granted. He was a friend to liberal principles, but he stood there on the faith of an act of parliament. The two corporations in question had paid large sums of money for privileges, of which, he contended, they could not be deprived, unless by the king in council. This was the fourth attempt which, since his experience in parliament, had been made, and which he trusted would fail, as all the previous attempts had failed. In 1806, the Globe Insurance company brought in a bill upon the subject, which however was thrown out. In 1810, his hon. friend, the member for Taunton, had introduced another bill on the subject which had also been thrown out. In consequence of the report of a select committee, in 1811, a third bill had been introduced; and what was its fate? He (Mr. G.) had successfully moved its rejection; and in that effort had been seconded by Mr. Perceval, then chancellor of the Exchequer, by sir V. Gibbs, then attorney-general, and by sir T. Plumer, then solicitor-general, on the ground that the privy council, and not parliament, was the place to which application ought to have been made. In 1813, when the same parties brought the subject before the privy council, lord Ellenborough took so unfavourable a view of their case, that they did not venture to persevere; and from that time to the present, no stir had been made with respect to it. Now, under those circumstances it was, that the present bill was brought before the House. For himself, he had never compromised his principles upon any question; and therefore he felt himself bound to oppose a decided negative to the motion.

Dr. Lushington

said, that according to the doctrine laid down by the hon. member, the question under consideration was one not to be decided by the House of Commons, but to be referred to his majesty's privy council. He would call their attention to the manner in which the bill, chartering those two companies, had been framed 104 years ago. In the preamble of that bill it was stated, that "whereas several individuals had failed, &c, it was desirable that such companies should be formed," &c. Now, if it could be shewn, that only four parts in a hundred of the whole insurance business of the country was done by these companies, it was quite clear, that the act of parliament had failed to effect its object. The hon. gentleman supposed that the act of parliament gave these chartered companies exclusive rights for ever, unless some person went before the privy council and proved them injurious; but the legislature so far from having tied up its own hands, had been particularly careful, and had in fact fixed two modes of doing the same thing. If the present objections to the measure were to be pressed, what would be the consequence? Why, measures would be taken, by which that would be done out of the country which it was thus attempted to prevent being done within it. Under all the circumstances of the case, he felt himself bound to support the motion.

Mr. T. Wilson

thought the present companies ought to be protected, unless it could be proved that they had been hurtful. He was of opinion there were but few insurances but what could be effected at the underwriters at Lloyd's, even without the two companies; and that at present the public had all the advantages of the respectable firms in the city; for either one partner signed for the others, or a broker at Lloyd's signed for the whole, With respect to the charge of 25 per cent by the broker, the hon. gentleman must be in error; for the charge was only 5 per cent. He thought there was nothing before the House to justify the assertion that these companies had been hurtful, and that therefore, under the words of the act of parliament, they ought to be protected. The proper mode would be, to move for a committee, to inquire if they had been injurious, or to refer it to some other competent tribunal.

The Solicitor-General

said, that without pledging himself to any ulterior opinion upon this question, he felt it necessary to state that, in granting the charters in question, parliament never intended to tie up its hands, and deprive itself of the power of granting new charters under any circumstances.

Leave was given to bring in the bill. It was accordingly brought in by Mr. F. Buxton, and read a first time.