HC Deb 10 June 1858 vol 150 cc1910-4

Order for Committee read; House in Committee.

Clause 1 agreed to.

Clause 2.


wished to know what notice would be given to depositors in banks which were converted from unlimited to limited liability of the change that occurred in their relations towards such banks?


said, that under the former Act it was provided that no change could affect existing contracts. After a change to limited liability, a bank must advertise the circumstance upon all its forms.


drew the attention of the hon. and learned Gentleman to the cases of running accounts which were not in the nature of contracts.


replied, that it was competent for parties to withdraw their money if they pleased, as they would have sufficient notice of the change.


suggested, whether there should not be some special notice.


would have no objection to adopt any suggestion that might be made upon the point.

Clause agreed to.

Clause 3.


proposed to apply the Bill to existing companies by adding, after the word "business," the words, "all existing companies at the time carrying on business on unlimited liability before availing themselves of the provisions of the Act."


asked the hon. and learned Gentlemen whether, after the greater number of shares had been issued, there ought not to be some intimation given as to what the value of the shares might be, and a statement of the amount which the depositors had paid?


said, that the memorandum of association would state the information which the right hon. Gentleman required.


proposed the addition of the following words to the clause, "and also the amount of all debts and liabilities to the said joint-stock company on the 31st December immediately preceding, signed by two of the directors and the manager," his object being to have their debts and liabilities published every year.


thought there would be some difficulty in publishing those statements in the manner proposed. He would not, however, object to the Amendment if the Committee thought it desirable to adopt it, as he was anxious for the fullest publication of the affairs of those companies.


thought the Amendment of his hon. Friend would render the statements of those companies plainer to the public.


said, if it were desirable to have a statement which would not deceive the public, as all such statements generally did, he thought that the Bill should define more accurately what the statement should be. The first requisite should be to compel a declaration of the assets truly valued, stating what were good and what were bad. There should be a further provision, that if the directors neglected to distinguish the good, bad, and doubtful assets once every six months, they should be subjected to a penalty which would prevent them from deluding themselves and the public by a statement of assets which were no assets at all.


supported the Amendment.


said, that the clause ought to be struck out altogether, as while they proposed to make it incumbent on the bankers to set out the increasing liabilities, they did not require them to give any account of the increased assets.


said, that the clause introduced a more perfect audit; but it would be necessary to insert words which would prevent a one-sided account being given.

Amendment, by leave, withdrawn.


then moved to insert the words, "and shall also be legibly printed at the top of every receipt given for deposits by the company," in the clause, so as to make it appear on such receipts that the company was limited.


opposed the Amendment, considering it unnecessary.

Amendment negatived.

Clause agreed to.

Clause 4 was also agreed to.


said, there was an essential difference between banking and ordinary business which called for a modification in the principle of limited liability as applied to banks. It was desirable as a matter of policy that some legislative guarantee should be taken for the credit and stability of banks, the functions of which in some respects resembled those of a trust. The peculiarity of a banker's business was that he held almost all his money payable on demand, and his very safety rested on the forbearance of his creditors. There ought, therefore, to be some security for the creditor in the event of the insolvency of the bank.

Clause,— If a Banking Company, constituted on the principle of Limited Liability, shall become insolvent, all and every the proprietors for the time being of any interest or share in the capital thereof are individually liable in their persons and property to be called upon to contribute for or towards the payment, satisfaction, or discharge of the debts, liabilities, and engagements of the said Company, not only such part or parts of all and every share or shares held in the capital of the said Company, as shall not have been theretofore called for and paid up, but also all such further sums of money, not exceeding the amount of the share or interest held by such proprietors respectively in the capital of the Company, as shall be requisite and necessary to pay, satisfy, and discharge the debts, engagements, and liabilities of the Company,

brought up, and read 1°.


did not advocate either one principle or the other, but would leave the public to be perfectly free upon the subject as to whether they would deposit their money in banks with limited or unlimited liability. He thought they ought to put the principle in practice as regarded banks as well as in other joint-stock undertakings. It was not so much a question of capital as of public confidence.


said, it had been his fate to be director of one of the largest banking undertakings out of London, in the county of Lancaster, and it was there found that the true principle to proceed safely upon was not so much in respect to large accumulation of deposits, as a perfect reliance on the skill, prudence, and judgment of its managers. All the events that had reflected so much disgrace on the commercial community had ensued from banks on the unlimited liability principle trading on supposititious capital, and who pledged the liability of the shareholders to an enormous extent.


hoped the clause would be negatived, seeing that the Bill proceeded entirely on the principle of letting the public judge of banks for themselves, and trust to the government, management, and stability of its managers without introducing any legislative guarantees.


said, that the clause was unnecessary, because it was already the practice of joint-stock banks to call up only about half the amount of the shares.

Motion made and Question put—"That the Clause be now read 2°."

The Committee divided:—Ayes 40; Noes 128: Majority 88.

On the Question that the CHAIRMAN leave the Chair,


said, that notwithstanding the high authority in favour of the Bill, he doubted whether it was one that deserved the approval of the House, and he would move that it be read a second time that day six months.


said, he had intended to move as an instruction to the Committee that the provisions of the Bill should be so altered as to include insurance companies, but he found on looking more carefully at the Bill that, in order to carry out his object, it would be necessary to introduce special clauses which might be inconsistent and inconvenient in a measure relating to banks. He wished, however, to ask the Chancellor of the Exchequer whether he would have any objection to introduce a Bill for the purpose of placing insurance companies upon a more satisfactory footing? After a very patient inquiry before a Committee in 1853 the late Government had framed a measure on the subject, which was introduced last year, and they had since prepared another Bill, which, had they remained in office, they had intended to submit to the House. He thought it was much more advisable that a measure on such a subject should be introduced by the Government than by a private Member, and he wished to know whether the Chancellor of the Exchequer would take up the question?


replied that the subject was undoubtedly one of considerable importance, and under ordinary circumstances he would have been happy to endeavour to meet the views of the hon. Gentleman, but in the present state of public business he could not undertake to bring forward a Bill.


observed, that such a Bill as was indicated by the hon. Gentleman (Mr. Wilson) might be comprised in one or two clauses consolidating the various measures relating to the subject.


, repeated that, in the present state of public business, he could not promise to prepare such a Bill.

The House resumed.

Bill reported, as amended, to be considered on Monday next.

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