§ Mr. Fowell Buxtonhaving moved the order of the day for the second reading of this bill, Mr. Grenfell reminded the House, that counsel were to be heard against the bill.
It was his impression that in this stage counsel were to be heard.
§ The Speakerobserved, that counsel were not ordered to attend against, but upon the second reading of the bill. If the House decided that the bill should not be read a second time, the opportunity for hearing counsel would never arrive.
The bill was then read a second time. After which, counsel were called in, when Mr. Serjeant Bosanquet, Mr. Serjeant Taddy, Mr. Harrison, Mr. Marryat, Mr. Adam, Mr. Cross, and Mr. Alderson, appeared at the bar, in behalf of various parties interested in the measure. Mr. Serjeant Bosanquet was first heard against the bill, on behalf of the Royal Exchange Assurance company. Mr. Harrison was next heard on behalf of the London Assurance company against the bill: Mr. Marryat argued at considerable length in support of the interests of the underwiters at Lloyd's; and, Mr. Serjeant Taddy appeared for the Insurance brokers, in whose behalf he adduced a variety of arguments. Counsel having concluded,
§ Mr. Fowell Buxtonthen rose to move the committal of the bill, and observed that the learned counsel who had been heard, had contended, that Joint-stock companies were entitled to no superior protection—a position in which he cordially concurred with them. They had also expressed an apprehension that if the present bill passed, Joint-stock companies would hereafter obtain those privileges. For his own part, he could see no reason for any such apprehension. To whom were such companies to apply? To the House? He believed not one member was 921 of opinion, that Joint-stock companies were entitled to any protection. To his majesty's ministers? They had expressed themselves decidedly hostile to them. To the law officers of the Crown? They had already given a body of opinion against them. But it had been suggested, that companies might form themselves to effect insurances, binding themselves by a deed not to be answerable beyond the amount of the sum the partners severally subscribed. He doubted the validity of any such deed; but he should be very ready to concur in a clause to declare any such agreement invalid. The simple object of his bill was to repeal the act of Geo. 1st. which was framed, more than acts of parliament generally were, in the form of a syllogism. The major was, that trade ought to be encouraged—the minor, that trade was promoted by the grant of exclusive privileges—the conclusion, that exclusive privileges ought therefore to be granted. The syllogism of his bill, on the other hand, was, that trade ought to be promoted—trade was promoted by abolishing exclusive privileges—therefore he proposed to abolish them. It had been truly stated by a right hon. gentleman on a former night, that there were four modes in which assurances could be effected; 1. by chartered companies; 2. by unchartered companies; 3. by partnerships; and 4. by individuals; The first and last, that right hon. gentleman (Mr. Huskisson) had stated to be the most inconvenient. Upon the general policy of allowing insurance by Joint-stock companies, he was borne out by Adam Smith; who, though no friend to such companies in the main, approved of them as applied to that particular object. But, a stronger authority in favour of the principle than the opinion of Adam Smith, or any other writer, was the universal practice of those countries in which the trade of insurance was unfettered. In France, to a very considerable amount; in America, almost entirely; in Holland, at Petersburg, at Copenhagan, and at Hamburgh, the business of insurance, to a very great extent, was carried on by Joint-stock companies. As a proof that it was felt how much more desirable the security was of a Joint-stock company (in which all parties were ultimately liable) than the security of a chartered company, or of single individuals, the agent of a company at Paris bad lately been in England, procuring insurances, upon the very ground, 922 that he could offer a security better than, by the law of England, we could give at home. He (Mr. B.) had not a doubt that, if once Joint-stock companies were formed, England, with her high credit and commercial character, would obtain almost a monopoly of the insurance of the world. And, what objection could be urged, against the bill, beyond individual interests? Men's houses, and goods, and lives, were already insured by Joint-stock companies. But it was said, that the risk was greater in the case of marine insurances. If the risk was greater, the latitude should also be greater. But, the great proof of the advantage of companies was, that companies did exist for effecting marine assurances. They were illegal; they operated under a great disadvantage; yet they did exist and carry on business. His argument therefore was, that in all countries where insurances were free, they were effected by companies; and that in England they were effected by companies, in those cases in which companies were lawful. The inconveniences of the present system were striking. A merchant in the country who wished to effect an insurance, wrote to his agent in town; the agent went to the broker; and, both broker and agent had to be paid. It had been complained, that he had said that the merchants paid the brokers. He never meant that two distinct payments were made to the insurer and the broker, but one gross sum was paid, in which the broker's payment was included. He had stated, that the broker's payment was twenty-five per cent on the premium. This, he hastened to say, was a mistake. He had been Jed into it by the committee of 1810; the sum really paid was ten per cent. The broker was necessary now, because there was to be a dealing with many individuals; but, a public company would be dealt with directly, and the agency would be spared. In the matter of settling, the advantage to be expected from the measure was incalculable. As matters now stood, the broker first offered the policy to the chartered companies; but they would take nothing but the best risks. He then went to Lloyd's, and the policy was underwritten by a number of persons, according to the magnitude of the sum. After a lapse of two or three years, perhaps intelligence was received of the vessel being lost. The insurer looked at once, as a matter of course, for the settlement of his policy; but, he found one underwriter 923 probably dead, and his executors (troublesome people generally) were to be dealt with; a second was insolvent; a third litigious, and ready to defend an action. The difficulties encountered in this way were frequent and serious. He held a list of policies in his hand, done, to the amount of 150,000l.; between the years 1810 and 1814; and there was not one of them in which there had not been a death, an insolvency, or a litigious suit, prior to its settlement. In one case—upon a policy of 10,000l.—there had been nine underwriters, and four insolvents. He did not mean to insinuate that all underwriters were insolvent, or litigious, it was enough for his purpose that these evils were frequent. As to the bill, it would remedy the evil from death. Now, with a Joint-stock company, three-fourths of the evil would be avoided. A company did not die; its insolvency was in the highest degree improbable; and in case of litigation, one action would be brought instead of twenty. Under such circumstances, there could be no doubt that insurances with companies would be preferred; and it was hard that the merchants of England should not, like the merchants of other countries, be allowed to take that security which they thought most advantageous to them. What was wanted in insurances was capital and security; and as England surpassed all other nations in capital and security, there was every probability that it would, if the trade were free from restrictions, monopolize the insurance trade of the world. As to the claims of the two chartered companies (the Royal Exchange and London Assurance), the simplest answer would be a statement of their privileges. The chartering of those bodies had commenced in a job, and their powers had continued longer than they lad a right to hope for. Personally, he desired to speak with great respect of those companies, and of the parties connected with them; but, the terms of their charter were distinctly no more than these; they had their exclusive privileges granted them on the condition of the payment of 300,000l. each, and it was stipulated, that if the privilege were removed in 31 years, the sum should be repaid to them. This limited, evidently, their duration to 31 years; even if they paid the 300,000l. each. But, in point of fact, they paid only 150,000l. each; the rest having been remitted, on a statement of the losses they had incurred. They 924 had enjoyed these exclusive principles, not only for 31 years, but for 104 years; and, having had the benefit of them for more than three times the stipulated period, he thought they had no just cause to complain, if their exclusive privileges were no longer continued.
Mr. Grenfellsaid, that his hon. friend had alluded to the Alliance Company, upon which subject it had been his intention not to have made any observation; but, as it had been introduced, he would speak of the individuals who composed it, in terms of the highest respect. No names, certainly, could be more respectable; but it was proper the country should know the principle on which that Company was founded. The principle was this: a certain number of most respectable merchants had formed themselves into a company, with a real capital of 500,000l., although, in the prospectus which they had issued, they called it a capital of five millions. They might as well style it fifty millions; but he maintained, that the only tangible capital which had been subscribed was 500,000l. always, of course, bearing in mind, that each individual subscriber would be liable for all the engagements of the company. So long as we found the names of Baring, of Rothschild, of Irving, of Buxton, and of Alexander, nothing, certainly, could be more respectable or substantial than the security; the bank of England could not be better. But, however respectable those names might be, was it not at any time in their power to transfer their shares, and then would the public have such solid security? For the public never could have the means of knowing when those transfers might take place. In supporting this view of the subject, he stood there as the advocate of two chartered companies, who held their privileges under the sanction of an act of parliament. In all the votes which he had given on that subject, he had proved himself a warm friend to the fullest freedom of commercial transactions, and no connection with either of the two chartered companies should ever induce him to depart from that principle. But he could not, therefore, consent to the violation of privileges which were held under the protection of an act of parliament, and for which a valuable consideration had been paid. In the act of parliament, an express clause had been introduced, specifying the grounds upon which they were to enjoy them, and their 925 duration; and yet, they now were to be placed in just the same situation as if such a clause had never been enacted. But, did the act stop here? No; in the very next clause it pointed out the mode in which the charter was to be affected, in case such a step should become necessary; namely, that in case it became expedient, his majesty might revoke the charter by letters patent. He, therefore, grounded himself upon the act of parliament, and maintained, that they could not interfere with the charter unless in the mode which the act pointed out; namely, by an application to the king in council. In support of this view of the case, he was fortified by precedents. There was the case of the Globe Insurance Company in 1806, which was composed of the most respectable names; but that bill was rejected. In 1810, several merchants formed themselves into a similar company, and a bill was brought into that House, which was opposed by himself and some others; the consequence of which was, that the measure was referred to a committee to inquire into the whole state of the Marine Assurances. He had had the satisfaction, on that occasion, of being supported by the then chancellor of the Exchequer, Mr. Perceval; there was on the same side, sir Vicary Gibbs, together with sir Thomas Plomer, at that time solicitor-general. Those distinguished individuals voted against the measure, on the ground, that the act of parliament pointed out the mode in which alone the charter could be touched; namely, by an appeal to the privy council. The bill was accordingly thrown out, and an application was made to the privy council, of which, at that time, lord Ellenborough was a member. However, they did not think fit to follow up their claim. The measure consequently fell to the ground, and, since that period, this was the first attempt to revive it. He therefore thought that, in tenderness to vested rights, which should be sacred, they could not without a gross violation, touch the charter, in any other mode than that which the act prescribed. He respected the omnipotence of parliament, but he hoped that it would in this instance, as it had always done, respect the vested rights of these two companies; and, as he had before received the support of a former chancellor of the Exchequer, he looked forward with confidence to the assistance of the right hon. gentleman opposite, and trusted he would 926 join him in negativing the present proposition.
§ Mr. Hudson Gurneysaid, he had the greatest doubt whether any company ought to be allowed to effect marine Insurances, and, at the same time, Insurances on lives: the nature of the one being an insurance against immediate risk; and the other being a yearly payment for an eventual return to a man's family, calculated on different principles, and which ought not to be subjected to future hazards, which it was impossible for the insuring party to guard against, or to foresee.
The Chancellor of the Exchequersaid, that in considering this measure, the question he had asked himself was this: whether upon any principle of equity or justice he was bound to object to the course taken by the hon. gentleman opposite. And first, with regard to the policy of the measure, he had expressed a decided opinion in 1813, when he was in the Board of Trade; the question was then under the consideration of government, and he had given an opinion favourable to the repeal of the exclusive privileges of these two companies, and certainly did not think they had made out the strong case which the hon. member for Penryn seemed to suppose. They had undertaken to pay, in consideration of the exclusive privileges to be derived from their charter, the sum of 300,000l. each, of which sum they actually did pay 120,000l. There was also a condition, that they should enjoy these privileges for the space of 31 years, unless they received six months notice, which notice was to be accompanied with the repayment of their money. This sum was the quid pro quo. A considerable space of time had elapsed since the expiration of the period, and the question had not been raised, partly, perhaps, because there was no anxiety about the matter, and partly on account of the difficulty in determining the mode in which these privileges were enjoyed. The difficulty he took to be this: the act of parliament limited the prerogative with respect to the charter; so that, if the Crown were to revoke it, it must be done absolutely. It could not be done in part; and if the Crown were to interfere at all, it must be done completely;- and then they would be left no charter at all. It was to enable parliament to deal with this insulated part of the exclusive privileges of the charter, that it became necessary 927 to introduce this measure. He did not think that any injustice would be done by passing this bill; but that many advantages might arise from abolishing those exclusive privileges of which these two companies had availed themselves to a very limited extent indeed. Looking, therefore, at the measure in this point of view, he felt himself called upon to vote in favour of the bill.
§ Mr. Thomas Wilsonsaid, he regarded this question as one of very great importance. He confessed he was a good deal surprised at the view which the chancellor of the Exchequer had taken of the subject. Now, if one half of an engagement were to be binding, he could not see why the other should be violated. He thought he was justified in saying, that if the House should pass this measure, they would be invading vested rights upon theoretic speculations rather than upon good sense and sound experience; and the more especially he thought so, after the cases alluded to by an hon. gentleman opposite, and the names which he had mentioned as supporting his view of the case. But, he should like to know what was the necessity for this measure. The hon. member who had introduced the bill had said, that if the measure should pass, we should have in this country the insurance trade of all the world; but this opinion appeared to him to be exceedingly ill-founded. All the foreign companies were falling to pieces. At Hamburgh, the scheme had been a failure altogether. In France, the Compagnie Royale took insurances only in Paris; and the shares of the Compagnie Generate, which had broken in upon its capital, were at a discount of ten per cent. The present system was approved of by the merchants of the country; and in his judgment, instead of looking out for public companies, they should look out for good underwriters. He therefore, thought it would be letting down the dignity of the House of Commons to interfere in the concern, when the act of parliament had pointed out the course which should be adopted; namely, an application to the king in council.
§ Mr. Humesaid, he had at first thought that the two companies had a claim for compensation, if their privileges were taken away; but, on further consideration, he had come to the conclusion that his first impression was incorrect, and he could only consider the two companies as 928 individuals having a lease for 31 years, for which they had paid a consideration. If, then, his majesty's government had taken away their privileges before the 31 years had expired, they would, in his opinion, have had a claim, which, as the case stood, they certainly had not. It was generally agreed, at present, that exclusive privileges were not to be defended. Let, then, the opposers of this measure make out why this particular case should be an exception to that general principle. If his majesty's ministers were to advise the Crown to abolish the charters, that might certainly be done. The course, therefore, which they were now taking, was of consideration for these companies; and therefore he really did think that the opposition made to the measure by the parties interested was, to say the least of it, very injudicious. He was not connected with either of the companies, or with Lloyd's, and was at first inclined to see the measure unfavourably; but it should certainly now have his support.
Mr. Alderman Woodsaid, it was true, that ministers might recommend the revocation of the charter, if any injury had arisen in consequence; but, was there the slightest evidence of this in the present case? He bore his willing testimony to the correctness and honourable dealing of the gentlemen connected with Lloyd's Coffee-house, and the liberality with which they lent their aid to every charitable institution and benevolent object.
Mr. Alderman Thompsoncontended, that the acceptance by the government of the 120,000l. from the chartered companies, was a confirmation of their rights, and exclusive privileges. He denied that, as the business of marine assurance was now conducted, it could be considered as a monopoly, or that it interfered with the interests of a free trade. There could be no greater or more active competition afforded to the public than that existing at the establishment at Lloyd's Coffee-house. What he apprehended was, that the present measure would destroy the competition, and in the end create a great monopoly. He looked with caution at propositions alleged to be founded on the principles of free trade, proceeding from a quarter which, when the Spitalfields Bill was before the House, last session, shewed that, where personal interests were at stake, there was no aversion to the closest monopoly. As he before stated, the effect of the bill would be, eventually 929 to destroy that public and active competition which now existed. Look to the progress of insurance associations in Hamburgh. In 1806, there were in that city no less than eighteen or twenty of them, founded on the joint-stock principle. By that overstraining principle they were now reduced to six companies. There did not exist a necessity for a greater competition in marine assurances than the public at present possessed. There were more than a thousand underwriters at Lloyd's, and the competition was as open to the insurer, at that establishment? as Mark Lane was open to the corn-seller, or Mincing Lane, to the dealer in sugar. The bill was most unnecessary, and would produce severe injury to 3,500 brokers and underwriters. Had the hon. member for Weymouth, in place of enlisting the exertions of his majesty's ministers in support of his measure, endeavoured to induce them to reduce the policy duty, amounting to between SO and 40 per cent., then, indeed, would he have effected a great public benefit, and given to commerce and industry, and free trade, a considerable facility. Let the House look at the effect of an overstrained competition in other public companies. Had any good resulted from the numerous establishments of Water and Gas Companies? They became so numerous as to risque their ability to continue. And what was the expedient? They had portioned the metropolis into different districts, under a positive engagement not to interfere with each other; so that in the end the public were obliged to pay at a much higher rate than when the nominal competition was less. Indeed, some of the water companies, having been obliged to parliament for a change in the acts under which they were originally regulated, had in consequence of the alteration, increased the rate of charge on the public 50 per cent. For his own part, he had no personal connexion either with Lloyd's or the other two companies; but as a merchant, having, in the nature of his business, had extensive dealings with the first, he had experienced the greatest facility, without any of those injuries to which some hon. members had alluded.
§ Mr. Buxtonsaid, that after the personal attacks which had been made upon him— [cries of "no, no."] He must contend, that it was a direct personal attack to say, that he felt and thought differently where his own interests were concerned. He 930 appealed to the candour of the chancellor of the Exchequer, whether in the measure which he had introduced relative to the trade in beer, he (Mr. B.) had been found in the number of those who were his opponents, either in or out of the House. He was placed in a situation of great difficulty: public duty and private interest were conflicting; and he would appeal to that right hon. gentleman to say to which he bad submitted.
Dr. Lushingtonsaid, he should consider the question in two points:—first, whether the repeal of the exclusive privileges of those chartered bodies was calculated to be generally advantageous; and next, whether, in effecting that repeal, any unjustifiable invasion of the legal rights of others was attempted? If he believed that those companies were, by their charters, legally entitled to and exclusive privileges, he would be the last man to rob them of their legal rights without full and adequate compensation. But, the reverse was the actual case, as it respected the claims of those companies. He had heard much of the opinions said to have been given by sir V. Gibbs and sir T. Plomer, as to the rights of those two companies. He owned he affixed little value to the opinions of lawyers, unless he was in possession of the precise case that was laid before them. Indeed, every man must know that the character and value of a legal opinion depended wholly on such statement, and that on the very same circumstances, they would get the conflicting opinions of counsel, if the case laid before them differed even in minute points. It was not in the power of the Crown to give to these companies the monopoly claimed. The very words of the act of parliament which recognised their existence, gave to the public the power, of revocation, after thirty-one years, on paying back the money advanced. He must be allowed to add, that judging from the inference that he drew, his hon. friend did not appear to him to understand the meaning and object of that clause. By that clause the Crown was enabled to destroy these charters, without the forms of a writ of inquisition, or scire facias, which was the ordinary process of the law, where the rights of other chartered bodies was impugned. The plain intention of this peculiar provision was to give, quoad, 931 these two companies, a new power of revocation, or rather an additional facility in revoking them. It would be a most extraordinary deduction from these that parliament, who itself had given that facility to the Crown, had tied up, by so doing, its own hands, and abdicated a power which it had uniformly heretofore exercised. These companies had now, it was to be remembered, enjoyed the benefit of the monopoly for fifty-seven years. He should next offer a few observations as to the policy of the measure. He was a determined advocate for unfettering trade in every branch to the greatest possible limit. On that principle he had voted for every measure introduced by the chancellor of the Exchequer and the president of the Board of Trade, with the view of effecting that desirable object. The hon. member for London, would fain persuade the House, that the system of marine insurances had reached its utmost perfection in this country—and that any interference would destroy its symmetry and grace. But the hon. member had not deigned to tell how it was, that with two exclusive companies, and the establishment at Lloyd's, that system had reached the maximum of perfection. The hon. member, in pronouncing that panegyric, must have forgotten the report of the committee of 1810. Nor was he the only member who wholly overlooked that report. The worthy Alderman (Wood) had stated that there was no necessity for the present bill, and that it was hurried on the attention of the House without any previous information given. The answer to all these objections was, that the measure had been fully inquired into, and that the committee had made a report which, for ability and accuracy, had not been exceeded. There was, therefore, no ground whatever for the statement, that the House was not in the possession of any evidence. The hon. member feared that the insurances would be so reduced by over-competition, that he should get his ships insured for nothing. The fact was, that if the charge was now too high, the competition would reduce it beneficially for the public. If, on the other hand, it was now at its greatest depression, then the competition could not make it lower. Since the Gas and Water Companies were formed, the public had had the fullest supply. There was a great want both of light and water until the competition was introduced. He recollected 932 when the first Water Company was introduced, the effect of that competition was, to reduce the value of the shares of the first Water Company from 10,000l. to 7,000l. He should therefore support the Bill, both on the principles of justice and expediency.
Mr. Plummetsaid, that although the advocates of the bill declared it was for the encouragement of competition, yet the effect of it would be to destroy competition; for if 50 or 60 joint-stock companies were formed, was it to be supposed the 1,500 or 1,600 individuals who were at present engaged in it could continue to carry on their trade? If these charters were only to be considered as leases for 31 years, why introduce the words "perpetual succession?" In that view, they differed from those other companies such as the East India and Bank, with whose provisions the legislature had interfered. The vested rights of private individuals were never invaded without granting adequate remuneration. The claims of companies secured by charters, stood on still stronger grounds. He thought the bill unnecessary to the public, most injurious to those whose interests were affected.
§ Mr. Lockhart,in answer to the observation of these charters being granted in perpetual succession, showed, that by a subsequent clause in the act, they were made determinable by the authority of parliament. He supported the bill.
§ Mr. Manningconsidered the measure unnecessary, from the reduced rate at which all risks were at present underwritten.
Mr. Robertsonentreated the House to look narrowly at this measure, so fraught with danger to the commercial interests of the country. Mr. Fox's famous India bill, which at one period agitated every trading town in the empire, was not so pregnant with danger to the state. What were the names that stood foremost upon the lists of this new company? Mr. Baring, Mr. Rothschild, Mr. Irving, Mr. Alexander, and others—the whole United money interests of the empire. A company thus formed was infinitely more dangerous than a chartered association of underwriters, personally responsible, and acting under limited restrictions. It would, in its branching out among the; shareholders, eventually engross to itself all the underwriting of this great city. Now, the commerce of the country was at present rather a great agency business- 933 than any thing else; and, so far from sanctioning a company of this engrossing nature, parliament was bound to take care that the interests of those foreign merchants who sent their consignments to this country, should be protected in the most effectual and the least objectionable manner; and this was only to be done, in his opinion, by the present system of underwriting. Unhappily, however, his majesty's ministers were disposed to lend too fond an ear to any suggestions coming from that mass of wealth which had been put in motion on this occasion. It was notorious that some of the individuals of whom it was composed were the great loan contractors for every power in Europe that proposed to raise money by borrowing in foreign markets. This itself might be an evil; but, was it not apparent, that all those who joined this underwriting company, by the embarkation of their capital in the project, were in fact taking shares in those very loans? But this measure now before the House formed but one link in the fatal chain which his majesty's ministers had been for some time forging, and which would operate if it should be completed, to the destruction of the whole commerce of the country. His own experience had but too strongly exemplified to him the tendency which they seemed to have to encourage commercial projects of a novel and most hazardous character. There had been a committee sitting up stairs on the navigation laws not long ago; and, so far as it was proposed to review and consider the system, he fully concurred with the committee.
§ The House divided: Ayes 51. Noes 33. The bill was accordingly committed for Monday.