HC Deb 21 February 1826 vol 14 cc644-7
Mr. Hobhouse

rose to present a petition, in which he requested the attention of the House. It related to a subject to which he had before adverted, and to which, notwithstanding all that had been said, he could not help attributing a great portion of the present distress—he meant Joint-stock Companies. When hon. members considered that every one of the shares in those bubbles which was thrown on the market was a bad piece of currency, they would not be surprised at the extent of the evil. The loss occasioned by the pitch to which these ruinous speculations were carried, if the highest rate of premium and the lowest rate of discount were considered, would, he had no doubt, be found to fall little short of 14,000,000l. Some, he believed by far the greater part, of these speculations were a total loss to the subscribers; and, of those few which were carried into operation, it would be found that very little profits had been shared. One great evil of those speculations was the injury they had done to the hitherto untarnished character of the English merchant. Some of the wildest of the schemes were ushered into the world with the names of the most respectable merchants and traders of London at their head; and he had been assured, by a gentleman well acquainted with these matters, that one cause of the present difficulty of obtaining credit in the city was, that so many had been engaged in those schemes, that persons knew not whm to trust. As this subject was likely to come shortly before the House, the matter having been taken up by the corporation of London, from which a petition would, in a few days, be presented, praying for inquiry into the late speculations, he would not trespass longer than while he briefly stated the object of the petition before them. It was from a person named Bernard Ross, and it complained of the conduct of the directors of the Mexican Mining Company. The petitioner had purchased shares in that company; but, on coming to sign the deed of settlement, he found that it contained clauses which were extremely objectionable, and which he therefore refused to adopt by signing the deed. In consequence of this, the directors decreed that he was no longer a shareholder. The clause to which the petitioner objected was one by which the directors were to be indemnified against any legal proceedings. This, he thought, was a course not warranted by law, the directors having certainly acted illegally in the sale of shares; for it was well known that persons who were not original shareholders, but had become purchasers, had no remedy for a recovery of their money in a court of law. The petitioner stated, that each of the directors had appropriated to himself 200 shares, and that the whole number divided between directors, solicitors, and others connected with the company was 3,600. So that the purchasers to that number would be deprived of a remedy in a court of law, not being original shareholders. The premium at which the shares were sold was said to be 15l. per share; so that the whole sum realized by those shares would amount to 54,000l. This statement, it was but fair to say, was denied by the gentlemen against whom the petitioner complained, and who stated, that the whole of the allegations against them were greatly exaggerated. He had seen some of the parties complained against on this subject, and they denied that they were culpable in the course they had taken. The whole amount of money received for shares by each director was, they said, pocketed from 1,500l. to 1,700l.; but even admitting this to be correct, he would contend, that the sale of these shares was not a bona fide transaction, and it was to be greatly regretted that highly respectable individuals should have lent themselves thereto. The prayer of the petition was, that a committee might be appointed to inquire into the formation of Joint-stock companies generally, and into that of the Mexican company in particular. When he had, on a former evening, asked the Attorney-general whether he intended to introduce any legal measures for the better protection of the public against the formation of such Joint-stock companies in future, he was sorry to learn that he had no such intention. The learned gentleman had said, that as the law now stood, no additional measure was necessary; for that directors, as well as others, could be punished for fraudulent transactions, if there was sufficient evidence to prove the fact. Notwithstanding this declaration of the learned gentleman, he could not help thinking that some measure was necessary for the more effectual protection of the public, particularly as the Bubble act, which made the foundation of all such companies illegal, and subject to very heavy penalties, had been repealed. Much mischief was likely to occur from the repeal of that act, unless some more effectual measure were introduced. He did hope that the House would institute some inquiry as to who were the authors of many of those ruinous schemes. He begged to call its attention to the course which had been adopted in parliament after the blowing up of the South Sea bubble. A noble lord, then on the opposition side of the House, objected to any address in answer to the speech from the Throne going up, unless it contained some pledge, on the part of the House, that they would inquire, and punish those who were concerned in that scheme; and an amendment to that effect was moved and carried. Certainly, there was this difference between the case of the South Sea bubble and the late speculations—that the former was directly en- couraged by the ministers of that day. But, though that was not the case with respect to the late Joint-stock companies, still it was, he thought, not less the duty of that House to inquire as to who were their authors. The petitioner, in this case, had mentioned the names of all the parties concerned in this company; but as it would be invidious, at present, to mention those names, he would not repeat them.

Ordered to lie on the table.