HC Deb 11 February 1858 vol 148 cc1169-84

said, he rose to move for leave to bring in a Bill to enable Joint Stock Banking Companies to be formed on the principle of limited liability. If his request should be conceded, it would at all events give the House an opportunity of considering carefully, and after due deliberation, whether there was any solid ground for the distinction which existed with respect to liability between joint-stock banks and other joint-stock companies; and whether the time had not now arrived when it was desirable to allow persons, if they chose, to form joint-stock banking companies in the same manner as they were allowed to form other joint-stock Companies. It might be that there was some special reason for the exception of banks from the rule applied to other companies but, if there were, it was desirable that it should be clearly stated; for all the arguments that had been urged in favour of the principle of limited liability applied with equal, and he should say with greater force, to joint-stock banks. Whenever the question had been discussed, all who had contended against the extension of the principle had done so on arguments which, if valid at all, would have been valid against the whole tendency of our recent legislation. He would remind the House that, before the recess, he had brought forward a Motion in which he had sought to show the direct evil of the exceptional legislation which had excluded banks from the measures of 1855 and 1856. He should not repeat the arguments which he then used, but he would only say that recent occurrences had served to convince him of the accuracy of the views which he then expressed, and he knew that many who were doubtful then, were now satisfied with the truth of what he had urged. In 1855 and 1856 a great change took place in the Jaws regulating joint-stock companies. Not only was the strict letter of the law altered, but the whole spirit and tendency of our legislation was changed, and new and distinct principles were avowed and recognized. For many years—from the time of Queen Anne to the year 1825—the policy of our legislation with respect to joint-stock partnership had been that of absolute prohibition, except in the favoured instances of associations formed by charter, or a special Act of Parliament. At that time, although it was considered a sound and beneficial thing for men individually to prosecute trade and commerce, yet for them to do the same conjointly was declared to be mischievous and illegal. In fact, a conspiracy to carry on a trade was a misdemeanour, just like a conspiracy to commit the highest crimes. That law commenced with the Bubble Act, 100 years ago, and was continued till 1825 or 1826. In the next period our legislation was almost as erroneous; for, though it did not prohibit joint-stock companies, yet, by a series of minute regulations, it endeavoured to do that for the companies, the shareholders, and the public, which they should have been allowed to do for themselves. Previous to 1826 joint-stock banks Were utterly illegal. After that period they were allowed to be formed, but it was only under special regulations, one of which was that every shareholder, whether he liked it or not, should be liable for the debts of the Company, to the whole extent of his fortune. Many of the other particular regulations were now either obsolete or repealed, but that one still remained, and he contended that it had been productive of the greatest possible mischief to the public, as well as ruin to the shareholders. In 1855–56 a new system was inaugurated, and Parliament avowed in the clearest terms the principles which were to regulate future legislation on the subject. They were told, for instance,— The principle is the freedom of contract and the right of unlimited association, the right of people to make what contracts they please on behalf of themselves, whether those contracts may appear to the Legislature beneficial or not, as long as they do not commit fraud, or otherwise act contrary to the genuine policy of the law. That was the basis on which the Joint-stock Companies Act of 1855 was rested. They were also told, with respect to those multitudinous provisions for the internal regulation of companies, that, These Acts, so far from having been the means of preventing fraud, have only afforded facilities for its commission. And his right hon. Friend the Vice-President of the Board of Trade thus wound up a speech remarkable for the clearness of its arguments:— To interfere with and abridge men's liberty, or to undertake to do for them what they can do for themselves, is really lulling their Vigilance to sleep, and depriving them of that safeguard which Providence intended for them, and helping fraudulent men to mislead and delude them." [3 Hansard, cxl. 110.] He read these passages, not because they were the opinions of any particular individuals, but because the House had accepted them and legislated upon them, and he now asked the Government to explain the grounds on which they maintained the distinction between banks and other joint-stock companies which were then established. He found accidentally in the report of the Committee appointed to consider the currency question, that Lord Over-stone was asked by the right hon. Baronet the Member for Carlisle (Sir J. Graham) his opinion as to the expediency of extending the principle of limited liability to joint-stock banks. Lord Overstone said he was a decided opponent of that principle, and could hardly be expected to give an unbiassed opinion on the question put to him. He stated, however, that if that principle were once applied to other concerns, he could not understand upon what ground it should be withheld from joint-stock banks. Lord Overstone added that he remembered having once asked the President of the Board of Trade the reason of the distinction made by the law between banks and other concerns, and that the answer was, that the distinction had existed in Acts of Parliament from time immemorial, and that to raise the question then would be virtually to stop legislation. That, said Lord Overstone, as he well might, appeared to him to be neither a very satisfactory or clear reason. But whatever might have been the reason of the distinction when first made, it was totally inapplicable now; because, in point of fact, joint-stock banks were subject to the same regulations as other companies, with the single exception that they were not permitted to avail themselves of the principle of limited liability. Having legislated in this form for one set of companies and excepted another set, what has been the result of that legislation? The principle of limited liability with respect to joint-stock companies in general had been in force from the year 1855 till now. We had ample trial of its operation in times of excessive speculation caused by abundant credit, when all the dangers which it was said would arise from the system were most likely to occur, and also of low credit and commercial disaster, and what was the result? During and since the recent panic, theories of all sorts have been started with regard to the money market, and yet not one single suggestion, so far as he was aware, had been made, in any pamphlet or newspaper, that the principle of limited liability ought to be repealed. He did not mean to say that all the companies formed on that principle had been successful; but while private houses without number had failed during the late panic, there wa3 not a single instance of a company formed on this new basis having, by its failure, produced any wide- spread ruin or disaster either among shareholders or creditors. But what was the case with the excepted companies—the joint-stock banks? Why, it was utterly impossible, however, for him or any other hon. Member to exaggerate the evils occasioned during the crisis by the failure of joint-stock banks, which were carried on upon the principle of unlimited liability, and a stronger argument against them than this could not be readily conceived. And, although the law had been made more just by the late alteration in the law with respect to the winding-up of those companies, yet that improvement had only tended to increase the evils arising from the principles of unlimited liability. The House was aware that not very long ago it was competent to any creditor to sue any individual shareholder in a joint-stock company for the full amount of his claim, and that such shareholder, however small might be his interest in the company, had to pay the whole of the claim. Nothing, undoubtedly, could be more unjust than that; but, perhaps, only one or two wealthy shareholders were utterly ruined by that law, while the smaller shareholders escaped. But, under the new so-called perfect law of winding-up, every shareholder paid exactly in proportion to his shares. That was right in theory; but, at the same time, it had this effect—the law came down upon the poorer class of shareholders in the first instance, so that now ten persons were perhaps utterly ruined for only one under the previous law. He had stated the nature and working of this exception to the general law, and he now called upon the Government to state the grounds on which that exception was founded. At the same time he thought he had shown sufficient reason for the introduction of a Bill on this subject. He might be told that it was not expedient to legislate until the Committee appointed to consider the laws as to banking, and to inquire into the causes of the recent failures, had reported to the House. That Committee, he thought, had little to do with this subject. When he made a Motion on this subject before the recess, the Chancellor of the Exchequer said that he would refer the subject to the Committee which had been appointed to inquire into the cause of recent failures. He (Mr. Headlam) did not think any such reference was necessary. After the crisis of 1847 a similar reference was made to the Committee which sat then; but that Committee never inquired into the principle of limited liability or unlimited liability, but confined themselves to considerations connected with currency and the causes of the crisis which had occurred. He had no reason to believe that the present Committee could inquire into the subject. He had never contended that unlimited liability of joint-stock banks had been the cause of the crisis; but it was caused by other circumstances than failure of joint-stock banks, which precipitated and aggravated the crisis. He had other reasons why he thought this matter ought not to go to the Committee. In reality, there was nothing for the Committee to inquire about; there were no facts which were not patent to the world. It was known that joint-stock banks had failed—that they had obtained extensive credit and large sums of money—but he was willing to admit that men might reason differently on those facts, and the Committee might get different opinions with regard to the working of the law. Was it desirable that the House should treat such a subject in such a form, when there were no facts, and they could only obtain the result of the reasoning of different persons? A stronger reason which induced him not to assent to the proposal for referring the matter to a Select Committee was, that the whole subject had been already investigated infinitely better than it could be by a Select Committee by the Commission upon the law of partnership, which published their report and the evidence taken before them about six or seven years back. That Commission was not contented with examining witnesses vivâ voce,but it circulated questions throughout the country, and procured evidence infinitely more valuable than any which could be procured by a Committee. He would not detain the House by quoting from the evidence, but he would just call their attention to the evidence of the witnesses who represented the Chambers of Commerce of two towns in which joint-stock banks had lately failed. Mr. Holland, who was selected by the Chamber of Commerce of Liverpool as a witness, stated that his attention had been called to the working of that state of things, and he found that in times, when there was little or no commercial distress, banks holding money on deposit desired to get it out, so as to realise a profit, and they discounted all sorts of bills, the consequence of which was cheap money and inflation of prices. But when a commercial panic came the effect was exactly opposite; the depositors ran for their money, and, in short, he showed how all this reaction came out of the existence of unlimited liability. Another witness, who came from the Glasgow Chamber of Commerce, who went the other way, and adhered to unlimited liability, pointed to the Western Bank of Glasgow, which had a large capital, and a clause of the charter of which contained a provision that the bank could be wound up if it was necessary, It had amongst its shareholders men of large property, who were not likely to allow that clause to come into operation; so that the exceeding solvency of the Western Bank of Glasgow was one of the reasons why he objected to the principle of limited liability. That Commission, therefore, had collected a greater and better mass of evidence than was likely to be obtained by the Committee which was about to sit. He would next say a few words with regard to the provisions of the Bill which he asked for leave to introduce. It had been suggested to him that it would be desirable to enact that the shareholders of any bank formed upon the principle of limited liability should pay up one-half or some other certain portion of the capital, and that the remainder should be called for only in the event of the bank not being able to meet its engagements. Now such a provision, he believed, would be a wise provision for the shareholders to agree to on the formation of such a bank; but it was one thing to consider a provision a wise provision, and it was another thing to think it wise to embody it in an Act of Parliament; and he did not think that it would be desirable for Parliament to lay down minute regulations for banks, for, looking to the past, there existed clear and distinct proofs of the evil of such a course of legislation. They lulled people's attention and added to the facilities for the perpetration of fraud. What his Bill proposed was, that there should be most complete publicity as to the entire capital, so that every one might know what was the original capital, how such had been paid up, and how much would have to be paid up if the bank suspended. He did not propose rendering the publication of the accounts compulsory, for the same reason which he had stated with regard to the other suggestion, to which he had referred, but the Bill would simply place joint-stock banks, formed upon the principle of limited liability, in the same position as other companies founded upon the same principle. In order to prevent misconception, he wished to call attention to another provision in the Bill, which was that it was not intended to affect joint-stock banks which had at the present moment failed. He did not propose to deal with the past, but to prevent the recurrence of similar evils. He had brought forward the question in 1848, and he had been unsuccessful, but he could not but believe that if the reverse had been the case the evils arising from the panic in 1857–58 would have been avoided. Crises of that description appeared to recur at almost fixed intervals. It was said by some that the lesson which had been taught by the late crisis would prevent similar evils in future, but similar lessons had been taught before 1857–58, and they had proved unavailing. There had been one in 1847–48, in 1857–58, in 1837; then again in 1825; and another might be expected about 1868; and he felt sure that the present Bill would, if it passed into law, prevent the recurrence of evils similar to those which had attended previous crises. He would therefore conclude by moving for leave to bring in a Bill to enable joint-stock companies to be formed on the principle of limited liability.


said, that he wished to second the Motion. In 1851 he had obtained the appointment of a Committee to inquire into the question of limited liability in partnerships generally, and though the evidence given before that Committee did not convince them that it would be right to recommend an alteration in the law immediately, yet they had evidence with regard to the working of the principle in commercial countries, in Holland and America, and the great balance of evidence was in favour of the introduction of limited liability into this country. Although the principle was not adopted then, the reasoning given in the Report and the evidence which was before that Committee had gradually worked on the minds of thinking men, and in five years from that date he had had the great gratification of seeing the law of limited liability established in this country. But one exception was made, and that was in the case of banking companies. He would ask any man who desired that a banking company should be safe, what was the first element of that safety? Would it not be the obtaining the assistance of cool and cautious men in the direction of the company; men who would be willing to give up large speculative profits in favour of safety to the depositors? Was it not more likely that the best men would be induced to give their attention to the direction of such banks when their liability was limited, than if they were to be liable for all their property? If that was so, you deterred and drove from the boards of direction many men whom of all others it was desirable to have there, in order to avoid the evils of rash speculation. Men of large landed and personal property would be willing to support a bank which they thought would be advantageous to the neighbourhood—would be willing to be connected with it, if they were liable only to a limited amount, instead of being liable to their last acre and their last shilling. This class of persons was prevented by the present law from being the managers of such concerns. The general policy of the House had been of late to remove all shackles and restraints from trade; and when it was shown that there existed such impediments in our banking law as prevented cool and cautious and able men from joining banking concerns, he thought that, in compliance with the current of recent legislation, the House ought to allow this Bill to be brought in. Every one must be glad to see the great increase of personal property which had taken place in this country of late years, but there was not a fair field of desirable investment for that property; and as its investment in this country was prevented, it was driven to investment abroad. It was calculated that there had been an increase of personal property in this country amounting to seventy millions a year. We had of late had few or no wars, and although for a few years 300 millions of investment had been opened by means of railways, yet that source was almost concluded, and, therefore, every facility should be given for the safe investment of capital.


It will be in the recollection of the House that this is not the first time, during the present Session, in which this subject has been brought under its attention by my hon. and learned Friend. On a previous occasion he moved, not for leave to introduce a Bill, but a Resolution expressing a strong and decided opinion upon the policy of adopting limited liability in relation to banks, and binding down the House to a sort of formula on the subject. I then, with other hon. Gentlemen, avowed my reluctance to have such a species of test administered to us; and the result was that, on a division, the House refused to agree to the Motion. But now my hon. and learned Friend has altered his course. He asks us to make no specific declaration of opinion, but simply to allow him to lay on the table a Bill on this subject. I, for one, am quite prepared to assent to that proposition; and I wish, at another stage, to give a most fair and mature consideration to the detailed plan of my hon. and learned Friend. But, having acquiesced in his Motion, I would merely now observe, that there are some material points connected with this matter to which he has not adverted in his address. He has not, I think, given sufficient weight to the important distinction between banks of deposit and banks of issue, and the different position of a noteholder and a depositor. And I still retain the opinion which I formerly expressed—that it is doubtful whether it is reasonable to deprive the noteholder of the unlimited liability of the shareholders, although the depositor may not require such a security. A depositor makes a specific contract with a bank, and may be contented to accept the limited liability of the shareholders. He enters into the contract with his eyes open; and I don't see, upon the grounds of legislation adopted by this House, any cogent reason why he should not be allowed to exercise his discretion. But with regard to notes, there is a considerable difficulty; because the note of a country banker, though not a legal tender, nevertheless practically discharges the functions of money. If a retail trader, or a person selling in the market of a country town, refused to accept the notes of a country bank current in the neighbourhood, he would take a step contrary to general usage and displeasing to the persons with whom he was dealing, and the consequence would be that he would run the risk of losing their custom. A trader, therefore, finds himself practically in a position in which he is not able to refuse such notes, if tendered to him in payment of a debt. He takes the note, not on the credit of the person who tenders it to him, but on the credit of the bank; and he can hardly be said to have much real choice as regards the acceptance of these notes. Therefore, there seems to me to be a clear practical distinction between the case of the depositor and that of the person who accepts the notes of a company. This is a point upon which I think my hon. and learned Friend is bound to satisfy the House, before we agree to pass his Bill. Another question requiring some consideration is this—supposing this license for limiting their liability to be granted to banks, is it probable that they will avail themselves of it to any considerable extent? I believe, from all the information I have on this subject, that the joint-stock banks of deposit obtain the large deposits they now hold very much from the circumstance of the unlimited liability of their shareholders. I greatly doubt, for example, whether the great joint-stock banks of London, and of some of the large provincial towns, would be able to hold their present amount of deposits, if the liability of their shareholders was limited. But if the knowledge, that there is at the back of these banks a large body of shareholders having unlimited liability, and many of them being extremely wealthy, is an inducement to depositors to intrust their money to them, is it likely that many of those banks would be found to limit their liability at the imminent risk of diminishing their deposits? I am not convinced that, if we make the alteration of the law now proposed, it will have as much practical effect as many hon. Gentlemen seem to expect. However, that is an argument which may also be used in favour of the measure, inasmuch as, if it is not likely to be operative to a considerable extent, the experiment cannot be a very dangerous one. Still, these are points which can be discussed on the second reading; and, as I have already said, the Government do not object to the introduction of the Bill.


said, he was glad that Her Majesty's Government acceded to the introduction of this measure, and he hoped that on its second reading the whole question which it raised would be ventilated. The subject was one on which very grave misapprehensions existed in the country. After the experience of the last autumn he would be a bold man who would deny that undue confidence had not been bestowed on joint-stock banks by the lenders of money, simply because their shareholders were responsible to their uttermost farthing. It was notorious that of late years capitalists had been in the habit of looking, not to the prudent management of these banks, but to the amount of capital held by their shareholders. Unlimited liability induced the managers and directors of joint-stock banks to carry on a much larger business than was warranted by their capital,—in fact to trade not upon the paid-up capital, but upon the private resources of their copartners, and this had greatly aggravated the evils of the late commercial crisis. He could see no sound principle upon which the Legislature ought to interfere to dictate the terms upon which one man should trust another, nor could he understand why limited liability which had been declared to be exceedingly good with regard to all other articles, should be declared to be exceedingly bad when you came to deal with money. He believed that the late crisis had been brought about much more by the action of joint-stock banks than by the currency laws, for they had caused a great portion of the overtrading to which the late disasters were mainly attributable. The truth was, that the high rate of interest offered to depositors in the joint-stock banks caused capital to flow into them which ought to have found its way into other channels, and thus it was that the managers of those institutions were enabled to make such large advances to private individuals. The Chancellor of the Exchequer had expressed a doubt as to whether persons would avail themselves of the principal of limited liability in regard to banks. To this he (Mr. Baxter) replied, by quoting the experience of the United States. Both in the New England States and that of New York there were banks founded upon both principles, but those in which the liability was limited were the best and safest concerns in the country. Believing that the distinction which his hon. and learned Friend wished to abolish was indefensible in principle and prejudicial in practice, he was very glad that the Government had assented to the introduction of this Bill, and hoped that they would support its second reading.


said, it appeared to him that the right hon. Gentleman the Chancellor of the Exchequer had entirely conceded the principle on which the Bill was founded. His hon. and learned Friend (Mr. Headlam) did not, as he understood him, wish to interfere with banks of issue; and the question involved in the condition of these banks might be best decided hereafter, when the Committee, which were about to reassemble, should have drawn up their Report or published their evidence. It was with banks of deposit only that the measure then under their consideration would deal. He had never heard any reason why a distinction should be made between banks and other trading companies as regarded the liability of their shareholders; and, indeed, he thought that the principle of limited liability which had been applied by the right hon. Gentleman the Vice President of the Board of Trade to all other commercial concerns, should be adopted with more rigour in the case of banks. The Chancellor of the Exchequer had expressed a doubt as to whether unlimited liability was not necessary to secure the confidence of depositors. He thought that this doubt was completely answered by the experience of the charter banks of Scotland and of the Bank of England, which were all conducted upon the principle of limited liability, The enforcement of the principle of unlimited liability had the effect of deterring the great mass of respectable and cautious men from connecting themselves with establishments conducted on that basis. He believed that every large capitalist who had ever had anything to do with banks founded on that principle had lived to regret his imprudence. All that the advocates of the limited liability principle contended for was, that capitalists and the public should have the option of establishing or of dealing with the one or the other description of bank; and there was surely nothing unreasonable in such a demand.


said, that he would not then enter into the merits or demerits of this measure, but, as he generally heard more exceedingly loose expressions upon the subject of currency than upon any other question, he wished to put the House on its guard against several loose propositions which had been advanced during the discussion. The hon. and learned Member for Newcastle (Mr. Head-lam) had reminded the House that for a long period panics had occurred every nine or ten years. Now, he (Mr. Drummond) recollected the first of those great discussions which took place in the year 1810, and he could not forget that at that time it was distinctly proved that the distress had been brought about by the over-issue of paper by the Bank of England. The Bank of England had not over-issued since that time. The recent distress had been produced by the overissue of bills, which was as completely an over-issue of paper, and tended as completely to produce speculation, as any other issue. The joint-stock bank, with limited liability, was simply this:—A hundred gentlemen put in so much money and then began to issue bills, having no basis whatever—having no business whatever. They did not manufacture anything, nor were they merchants employed in transferring a manufacture from one place to another. They were manufacturers of paper money—they were the flyers of kites on a large scale, and that was the whole of their business. They set up to obtain credit upon this new principle—to find out a great number of persons who were gudgeons enough to trust them. Hon. Gentlemen were not perhaps aware that an increase of paper money defrauded all the labourers in the country; the only thing thought of at such times was, what effect would be produced in the City, and how many merchants and manufacturers would break. The other day, when the Bank was authorised to issue paper money for the relief of certain gentlemen in the City, the effect was to raise taxes without the consent of Parliament, and make the labourers pay for that with which they had nothing to do. So far from thinking it a righteous thing for gentlemen to lend their names to banking establishments, without making themselves responsible, he held it to be a most dishonest fraud. What was the case with respect to the Glasgow Bank? The Glasgow merchants got out of it, and at whose expense? Why, at the expense of the labourers of Scotland. He only threw out these matters for consideration, and he rejoiced that, as 1810, there was a Ricardo to instil sound principles into the minds of the people, there was now an Overstone who would inculcate the same principles with equal or greater clearness.


observed, that there were no banks of limited liability in Scotland, and that the depositors in the banks where the liability was unlimited had not lost anything in the recent crisis.


said, he was glad to find that his hon. and learned Friend the Member for Newcastle had embodied the principle for which he contended in the shape of a Bill. The subject was a most important one, for it seemed to him that the experience of the last few years afforded the most convincing proof of the unsound-ness of the principle of unlimited liability applied to banking. Nothing could possibly be worse than the operation of that principle had been. His hon. and learned Friend the Member for West Surrey (Mr. Drummond) had given a definition of banking which must have astonished every one who had any acquaintance with the sub- ject. It was certainly quite new to him (Mr. Malins) to hear that it was part of the business of banks to fly kites. No doubt bankers as well as traders might employ themselves in doing so, but it was not part of their business. The great mischief in the unlimited system was, that it deterred many men of prudence from taking shares in a joint-stock bank. Some of the London joint-stock banks had deposits to the amount of fourteen or fifteen millions, and every shareholder was liable for the whole amount, and yet he felt convinced that those banks would obtain just as much credit as they now did if their liability were limited. The true principle was to have the business conducted on a prudent system. He could not see any difference between the principle on which the business of bankers ought to be conducted and other traders. It had been objected by the Chancellor of the Exchequer that it would be dangerous in country towns to allow banks of limited liability is issue notes, because the small traders there would be obliged to take their notes. But there was nothing to prevent such a trader going, if he liked, to the joint stock bank and demanding in exchange for its notes Bank of England notes or gold. The difficulty, however, as had been pointed out by the hon. Member for Peterborough (Mr. Hankey), did not arise; because, until the law was altered, a new bank of issue could not be established.

Again, if the objection taken by the Chancellor of the Exchequer were sound, there was no reason why banks of limited liability could not be confined to being banks of deposit. It was not, as had been stated, attempted to force upon the public banks founded on the basis of limited liability. Limited liability was allowed in other trades, and why should not the same right be granted to banks? The public were not sought to be forced, but they might choose whether they would go to a bank of limited or unlimited liability. Just as at present, in the case of other trades, there would be a notice over the door that a bank was limited. At present the system of unlimited liability was only a snare to the public; and there were many shareholders who could not pay anything. Men of prudence and integrity were at present debarred from having anything to do with joint-stock banks, and if the opposite principle were adopted they might reasonably expect that these establishments would conduct their business in the most careful and prudent manner; and a great public good would thus be accomplished. On these grounds he gave his cordial support to the bill.


said, he wished to explain that he did not mean to say that it was the legitimate business of bankers to discount bills; but he said that many banks resorted to the system of flying kites to make their business pay.


said, that he was connected with a joint-stock bank in Liverpool, and that he had never heard of any joint-stock bank, properly conducted, flying kites.


said, that he also must be allowed to differ with the hon. Member for West Surrey (Mr. Drummond), for in his opinion it was the business of banks to discount bills, but not bills that were kites. It was, however, of the greatest importance in the management of Joint-stock Banks to get fit persons to devote their time and to carry on the business in a proper way. At present there was the greatest difficulty in inducing such persons to join; and, connected as he was with a Joint-stock Bank in London, he knew that it was greatly desired to have an inducement to such persons to become shareholders.


said, that in reply, he would only advert to one objection which had been raised by the Chancellor of the Exchequer as to the difficulty connected with banks of limited liability being banks of issue. At present, as the law stood, it was impossible for any future bank to be a bank of issue. It might be expedient that there should be more banks of issue, as at present the banks of issue were very few. It was not, however, necessary now to discuss the question, and it might be reserved for the Committee. If the House should not think it expedient that the privilege should be extended, he should be quite content.

Leave given.

Bill to enable Joint-stock Banking Companies to be formed on the principle of Limited Liability, ordered to be brought in by Mr. HEADLAM and Mr. JOSEPH EWART.