LAW OF PARTNERSHIP.

HC Deb 20 February 1851 vol 114 cc842-50

MR. SLANEY

rose to move the appointment of a Select Committee to consider the Law of Partnership. The question was, he believed, one of much more importance to the well-being of the country than might be at first sight imagined. He rejoiced to think that some of the measures for the advantage of the great mass of the people had been already accomplished by that House; but he believed that there was no measure better calculated to advance and improve the condition of the people generally than the measure he was now about to submit to the House. The question was one deeply affecting all classes, and on these grounds he ventured to ask the attention of the House to his Motion. If they looked at the state of the great body of the working classes since the beginning of the present century, it would be found that while other classes were progressing, these persons were stationary, and were not partakers of the general improvement of the country. He need not refer to the condition of the agricultural classes during that period. It was well known, in many places, that their position was worse now than it was twenty-five years ago. With respect to rural labour, let them take twenty-six counties in the south of England, and, drawing a line from the Severn mouth to the Humber, they would find that in every county south-east of that line there had been, during the period he had alluded to, an abuse of the poor-law, and a neglect of the humbler classes, the consequences of which were now felt. Again, if they turned to the great towns of the realm, they would find the symptoms of a similar neglect. The state of the working classes was always regulated by the proportion of the supply and demand for labour, and this we had disturbed, and created a redundant population in the south of England by the poor-law abuses, and in Ireland by the Subletting Act. There was not a town in the kingdom which was not suffering from the effects of this evil. Then, again, the demand for labour was seriously restricted by the law of settlement as it stood; but as there was now a prospect of some remedy being applied in this respect, he would not offer any remarks as to the mode in which that law operated to the prejudice of the working classes. He now came to the restriction placed upon the employment of labour by the laws which prevented the united investment and distribution of small capitals for productive purposes, and, consequently, the accumulation of such capital, and the employment which under a wiser system it would give to labour. This was a subject important to all. It was important to the revenue, the manufacturer, and the landowner, as well as to the labouring population. If the fetters by which private enterprise of the description he alluded to was now confined were removed, the consuming power of the masses would be increased, and the customs, as well as the manufacturer and producer of articles of home consumption, would be benefited by the greater demand, and the landowner would be advantaged by the in- creased demand for land, and the additional security he would have for his rent. Look at one of the results of this system of cramping the energies of the people by those laws which restricted the free employment of capital. Looking around them there appeared vast heaps of capital in the hands of a few persons; and the Chancellor of the Exchequer could send out his Exchequer bills at 60s. premium, though paying only 2¼ per cent. If they turned to the working manufacturing population of the towns, it would be found that of these, consisting of three millions of the most intelligent and industrious of the community, many were in a state of depression and degradation, owing to neglect of provisions for their health, decency, and comfort, as shown in the reports of the Commission on Health, in 1844 or 1845. Let them contrast the splendour, the magnificence, and the luxury which existed in the present day with the wretchedness, poverty, and misery by which they were surrounded. It was evident that there must be something wrong in the system which permitted such a state of things to exist. For all this took place while there was at the same time plenty of capital and plenty of labour; but the state of the law prevented their combination. And thus it had been seen that hundreds of women, crushed to the earth amidst penury and misfortune, had been eager to avail themselves of the generous exertions of the right hon. Member for South Wiltshire, and expatriate themselves to the other side of the globe, instead of being employed, as they well might, at home. He did not state these things as causes of complaint, but as reasons for inquiry. There were no persons more deeply interested in the welfare of the working classes than the landed interest. He himself derived his income from the land, and his best wishes were for its prosperity. They should give fair play to the tenants of the country as well as the consumers. What was the present state of things in regard to the population? Why, although there was no doubt a great deal of employment given, there was, nevertheless, a vast portion of the labouring classes idle, unemployed, or ill paid, and emigration was going on to a very considerable extent. A great number of the ablebodied, being the most valuable portion of the population, were leaving the country, and distributing themselves over the other quarters of the world. We had, on the one hand, an abundance of capital, and, on the other hand, great skill and industry; but we yet wanted the power of enabling that capital to be employed in the way of obtaining the valuable labour of the country. What was the reason that some of our best and most skilful workmen were obliged to seek a livelihood across the Atlantic, when we had ample means, if the law would permit their full development, of employing them with advantage at home? The effect of this evil manifested itself most injuriously upon the laud; and he asked the attention of the hon. Member for Buckinghamshire, while he considered for a single moment this branch of the subject. It would be admitted that this country enjoyed peculiar advantages in the production of beef, barley, cheese, and wool; but those advantages were in some degree marred by a law which prevented the natural direction of capital to the employment of our labour at home, and therefore the demand for these products. If it could, then, be shown that the effect of the law was to fetter the natural employment of capital, he asked the House, as a matter of policy as well as justice, to have that law maturely considered, with the view to its immediate alteration. His belief was, there being no easy mode for the investment of capital by the middle and humbler classes, it was driven into the great bankers' hands, and into the hands of the great monopolists, who would only lend it to persons of great credit and position in the country. These parties often exercised that power which such capital gave them, by putting their feet upon the neck of industry. That was an unfair direction of capital, which should not be encouraged. There were four heads by which the distribution of capital was at present restricted. The first, the means by which the free employment of capital was prevented, was, that everything connected with the title of land—its title and the conveyance of it for the purpose of mortgages—was incumbered with a load of legal chicanery, which often prevented people who had undeniable security from obtaining loans for carrying out improvements by the expense which such legal chicanery entailed, and which in some cases added to the interest the borrower had to pay by 25 per cent. He rejoiced to find that this matter was referred to in the Speech from the Throne, and that a measure might be expected to render transactions of this nature more simple and less expensive. He hoped to see the time when a man might obtain a loan on good security without being subject to any expense beyond a mere stamp, and the cost of drawing the deed. The second means by which enterprise was limited and the employment of capital and labour prevented, was the necessity for having an Act of Parliament, the expense of which would not be less than 400l., to carry out the simplest and most obvious local improvement, as the building of a bridge, the making of a road, the erection of gas or water works, or any purpose of the kind. This might be avoided by passing an Act at the commencement of each Session applicable to each class of such improvements, on the same principle as the Commons Inclosure Act. The third head of difficulties was this, if a number of persons wished to combine their savings and industry together, for perhaps the benefit of the public as well as their own, not a single person could lend them any money without rendering himself liable" to the law of partnership; and, again, if any one of those parties who had agreed to be bound by the rules and regulations of the body, was disposed afterwards to turn restive, that one individual would have the power of throwing them into confusion, and of obliging them to go into Chancery. Now, the Committee that had sat last year had fully inquired into all these matters, and had recommended that the law which related to benefit societies should be made applicable to all such cases as he had referred to. He now came to the special subject of his Motion, and to the fourth head, namely, the law of partnership. He would state to the House as simply as he could what that law was at present. If a number of persons joined together, and one of them chose to advance a sum of money, however small, to aid and assist the partnership, he was liable, in the words of Lord Eldon, to his last shilling, and his last acre. The effect of such a law was this, it limited the distribution of money to the great capitalists, who thus absorbed the whole wealth of the country, and it prevented the distribution of capital to the rural districts, and, as a necessary consequence, the employment of the people. A laudable scheme was set on foot a short time ago for the erection of lodging-houses for the benefit of the working classes; but the law stepped in to prevent its being carried out, as it declared that every man who advanced money towards it rendered his entire property liable. A charter was then applied for; but when it was obtained it was at the cost of 1,000l., which took away all the profits of the undertaking. He asked whether that was not a gross injustice and a direct stoppage to the employment of the people? The report of the Committee to which he had referred recommended that charters of this nature should be granted with greater facility and at much less expense. This question of unlimited liability prevented enterprise and employment, and kept down the price of wages. The humbler classes were prevented from combining together for the welfare of their neighbours and their own advantage. But it was said that the present state of the law was so far good that it prevented wild and bad speculations; and it was therefore necessary to cast the shield of the law of partnership around the people themselves. He did not concur in such an observation; for he thought that they would be better consulting the interests of the people by allowing them to manage their own affairs, than interfering with them by Acts of Parliament. This subject had been gravely considered by the late Lord Sydenham in 1837, and also by the late Lord Ashburton, and they respectively decided in favour of an alteration in the law. Mr. Stuart Mill, who had been examined before the Committee last year, also gave valuable evidence in favour of such an alteration of the law of partnership as should permit the middle and the lower classes combining together for the improvement of their own condition, and the welfare of their more humble neighbours, by limiting the responsibility of each individual in any combined enterprise to the amount of his own stake. According to that authority, such a system had operated most successfully in America, and would no doubt do so here. But it had been objected, if you once permit such arrangements you might open the door to all the evils of combination amongst workmen. But surely those who were daily enjoying the benefits of combination in their clubs were not the men to refuse to the working classes the right to avail themselves of the same privilege. It was also said that such a change as he (Mr. Slaney) recommended would lead to undue and improvident speculation. But was there nothing of that kind now? Look at half your joint-stock companies, at your gold mining companies, and many of the railroad schemes of late years, and say, were they anything better than mere bubbles, into which men rushed only be- cause they were prevented embarking in really beneficial schemes of minor enterprise? He firmly believed that if the enfranchisement of capital, and the several other remedial measures to which he had glanced, were fairly carried out, we should have greater advantages springing from renewed industry, additional employment, consumption, and accumulation, than we could have from any other source. The Chancellor of the Exchequer had experienced great difficulty in making his taxes acceptable to the people; but, with increased capital and renewed industry, that difficulty would be removed. If the masses of the people were allowed fair play for their industry, an increase of capital and wealth would be immediately manifest. He fervently hoped to see the fetters placed around the accumulation and distribution of capital struck off; but, at present, he was asking for nothing of the kind—he was simply asking for the appointment of a Committee to investigate the subject. He was happy to say that, in Italy, France, Holland, and the United States of America, the limitation of liability worked admirably: and, with the testimony upon his side of the ablest men, the deepest thinkers, and the kindest philosophers, he thought himself justified in asking for a fair inquiry, by a Committee fairly chosen, of this most important subject. The hon. Member concluded by moving for a Select Committee, of which he had given notice.

MR. EWART

seconded the Motion.

MR. LABOUCHERE

said, that he should direct the few observations it was his intention to make, less to the great variety of topics which the hon. Gentle, man had introduced into his speech, than to the Motion which he had submitted to the House. The efficiency of the law of limited partnership was an important and a much controverted question. A Special Committee of that House, of which the hon. Gentleman was chairman, had been appointed to consider it, and the hon. Gentleman now moved for its reappointment. For his own part, he (Mr. Labouchere) was not able to come to any very decided opinion upon the subject, for, if they looked to authorities, they would find that the authorities were almost equally divided. The greatest commercial and the greatest legal authorities had expressed the most contrary opinions as to the effect which might be produced by introducing a system of limited liability which prevails in other countries, where capital is less abundant. Persons of great experience, great philanthropy, have expressed strong doubts whether the stimulus which a law of this nature would undoubtedly give, might not lead to consequences extremely injurious to the general interests of the country. The paralysation of trade through an over-exertion would do more real injury to the interests of the working classes, than the proposed measure could effect for their good. He could not put out of his consideration what might be the effect upon those creditors who, induced by an array of names to put trust in the solvency of these companies, found that they were perfectly incapable of discharging their liabilities. While he ventured to express an opinion that any sweeping alteration in the law which now regulated partnership should not be made without reflection, and might be attended with disastrous consequences, he was ready to admit that the laws which related to limited liability might be altered, and might be so modified as to render the investment of capital safer and easier for the capitalist. He did not object to the appointment of the Special Committee now asked for; and he was anxious that that Committee should enter upon its labours with calmness and judgment. He did not believe that, generally or extensively, the application of capital had been crippled. On the contrary, he believed that under existing circumstances there was an abundance of capital, and that it was always forthcoming whenever there was a fair or reasonable prospect of remuneration. Of course, it was sufficiently obvious that any improvement in the law of partnership must directly prove a great benefit to the working classes; but he very much questioned, as a means of investment for their savings, that those undertakings which were of a speculative character were desirable. There was much force and great truth in the observation made by a distinguished authority upon this subject: "They were to look not so much to the possibility of great gains, but to insure a perfect security for those investments, and their entire convertibility." In his opinion these elements were to be found more entirely and truly in the savings banks and in the public funds of the country. He was not insensible to the force of some of the observations which had fallen from the hon. Gentleman as to the importance of non interposition on the part of the Government with the working classes, as to the mode in which they might think proper to dispose of their savings. The hon. Gentleman had also alluded to cooperative societies. He fully agreed in the expression of opinion that the men who contributed their capital should also work for themselves; and he certainly was of opinion that nothing could be more improper than that the Legislature should throw any obstacles in the way of the disposal of their capital by the working classes. He was always in favour of leaving them in these respects to the exercise of their own judgment. In the long run, however, he was sure it would be found that the safest and the most profitable investments for the earnings of the working man were the savings banks and public funds. With reference to the question of land, a small parcel of landed property was to the eyes of the poor man as the greatest property in England was to the millionaire; and it was certainly most desirable that no obstacles should be placed in the way of the poor man which might debar him from investing his capital in the acquirement of land. He rejoiced that his right hon. Friend the Chancellor of the Exchequer had by his Stamp Act greatly diminished one of the obstacles which formerly oppressed the poor man in this respect. By the Bill which his hon. and learned Friend the Attorney General had announced his intention of introducing, for the registry of the titles of land, a still more formidable obstacle would be greatly removed. Expensive conveyances and titles were the chief means of preventing such a distribution of land which the hon. Gentleman, in common with so many others, desired. He did not know that it was necessary to say any more; he only wished to guard against its being understood that he assented entirely to the practicability of the object which the hon. Gentleman had in view. He would I not offer any objection to the Committee, but only amend the Motion by the insertion of the words "expediency of limiting liability" instead of "a proposed limitation." Select Committee appointed— To consider the Law of Partnership, and the expediency of facilitating the limitation of liability, with a view to encourage useful enterprise, and the additional employment of labour.