§ Order for Committee read.
§ Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."
MR. T. BARING
said, he could not but express his astonishment that a Bill upon a subject of such vast importance should not have been introduced by the Government. He could not help thinking that the President of the Board of Trade ought to have made himself responsible for this Bill, if the Government thought it was a measure that ought to be passed by the Legislature, and that it should not have been left in the hands of a private individual. The Bill was one of such importance for good or evil that he could not 2122 understand why the Government should have allowed it to reach its present stage without expressing their opinion upon its merits, or that of the Law Officers of the Crown. The effect of the Bill would be simply this—that whereas at present every partner was responsible to the extent of all he had to meet his liabilities, he would under this Bill be responsible only to the extent to which he had registered. That was a great change in the commercial legislation of this country. The right hon. Gentleman the Vice President of the Board of Trade had brought in several Bills to alter the law of partnership, but they had ail been rejected. Last year a Bill was proposed on this subject by the hon. Member for Birmingham (Mr. Scholefield), which was subsequently referred to a Select Committee. The right hon. Gentleman the President of the Board of Trade was Chairman of that Committee, and although it was decided by that Committee that no evidence should be produced as to the alleged evil or the remedy for it, it was obvious that there were not three Members who knew exactly what was really wanted, or, if they did know it, how the want was really to be met. That Committee sat for some time, and reported in favour of a Bill which was afterwards brought before the House. They had not now the same Bill. [Mr. SCHOLEFIELD: Identically the same.] He was glad the hon. Gentleman knew something of the present measure, for when the former Bill was read the second time he confessed that he had not read all the clauses when he submitted it to the House. It appeared that though the Bill was one of the greatest importance, the interest it excited was very little indeed, considering the few Members that were then present, and how easily under such circumstances it would be to pass it through Committee. He (Mr. Baring) said it was not precisely the same Bill as the last, and he would ask why the President of the Board of Trade had not stated his views in respect to it before it was allowed to pass through the second reading. So far from his (Mr. Baring's) objections to the Bill being diminished they were rather strengthened, and he thought that the House ought to pause before they extended the principle of limited liability further. When they witnessed the many gambling speculations that were encouraged under this principle of limited liability, the House ought to be most cautious in allowing the law of limited liability to be stretched further. It was 2123 perhaps wise to recognize the principle of limited liability in cases where individual capital was not sufficient to carry out legitimate enterprise. It was, however, an unfounded argument to say, that because we adopted the principle of limited liability in regard to great companies and important enterprises, we should carry it out into the concerns of private partnerships. Although the principle was carried out to its fullest extent in France and the United States, there were nevertheless serious objections entertained against it. In the United States, for example, there was plenty of enterprise, but little capital. In this country, however, there was not only plenty of capital, but also great enterprise. There was no necessity for limited liability in a country when private enterprise could be carried out by private means. He was aware it was alleged that this measure was intended to effect benevolent purposes, by enabling a capitalist to advance money to a deserving tradesman without incurring the liability of partnership. But there were many other ways of assisting a young man without incurring this risk—for instance, by advancing money on interest. But he thought it absurd to represent this as a Bill for charitable purposes; it was a Bill that would encourage the love of gain—to limit the stake with the chances of the great winnings of the gaming table. There was no want of capital in this country for any legitimate purpose, and no want of power if they chose to apply that capital. The effect of this Bill would be to make trade all speculative, and give less security to trade than now existed. His great objection to applying this limited liability principle to private partnerships was that it diminished the responsibility of those in trade. Upon that responsibility rested the assurance of constant vigilance, caution, prudence, and attention, in this country, which was the greatest commercial community that existed, the system of credit was carried to the furthest possible extent. It had been stated (and he believed that the fact was underrated) that two-thirds of our trade was carried on upon credit, and that system of credit rested upon the security of our laws. That necessity rested upon this fact, that it was known that every individual who engaged in trade was responsible for the whole of his property—that his social position was involved, if not his very existence. Anything, then, which shook the security upon which that system of credit rested must 2124 inflict injury upon the country. He wished to hear from the right hon. Gentleman (Mr. M. Gibson), whether he and the Government adopted this Bill; whether they were disposed to introduce any changes; whether the opinion of the Law Officers of the Crown had been taken as to the mode of carrying it into effect; and, for the purpose of giving the right hon. Gentleman the opportunity of explaining his views, he would move that the House go into Committee on the Bill that day six months.
To leave out from the word "That" to the end of the Question, in order to add the words "this House will, upon this day six months, resolve itself into the said Committee," — (Mr. Thomas Baring,)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ MR. MILNER GIBSON
said, that this was not the first appearance of the Bill before Parliament; and the Government had not thought it incumbent on them to interfere. The measure had received great attention from the hon. Member for Birmingham, and had been investigated last Session before a Select Committee; it had passed last year through all its stages, and had failed in the other House only he believed in consequence of the lateness of the Session. This Bill was mainly the same as that of last Session, and although there might be some small changes in the clauses they did not at all affect the principle. Some changes might be necessary in the Bill for the security of the commercial world, but these could all be effected in Committee; but the principle, which was that of limited liability, was already recognized and established. He quite agreed with the hon. Member for Huntingdon as to the importance of not introducing any measure which was calculated to shake the foundations of commercial credit in this country; but he drilled that the Bill would have any such effect. On the contrary, he believed its effect would be to place the creditor in a better position than he was at present. The principle of the Bill was, that any person might lend his money, receiving a share of the profits, without thereby becoming a general partner. At present, if he lent his money at interest, and the firm became bankrupt, he came in as a creditor; 2125 whereas if he were a partner under the provisions of this Bill on limited liability his money became assets, and was impounded for the benefit of the creditors. Therefore the security to the creditor would be greater under the Bill than it was at present. At present any seven persons uniting together could limit their liability, and this Bill was therefore of less extent than the existing law. The House could hardly make a retrograde step from the: policy of limited liability which they had already affirmed. He hoped, therefore, that, seeing that the Bill introduced no new principle, that it had received the sanction of that House in a former Session, and that the changes now introduced were of a kind that could be best considered in Committee, the right hon. Gentleman the Member for Huntingdon would not further oppose the progress of the Bill. He had no hesitation in saying, on behalf of the Government, that they adopted the principle of limited liability, and therefore he should give his support to this measure, without pledging himself to all the clauses in their present shape.
§ MR. HUBBARD
said, he quite agreed with his hon. Friend the Member for Huntingdon that this was a subject which the Government ought to have grappled with, and not have left in the hands of a private Member. It was very true that the Government accepted the principle of limited liability; and they had adopted it in respect of this Bill, for they had left a subject of immense importance to the commercial world to be dealt with by a private Member until it had passed through all the most important stages. He could not think that the right hon. Gentleman had met the objections that had been raised. The real question at issue was, whether it was right to introduce into the commercial policy of this country a new principle, which gave to the unprincipled capitalist the opportunity of speculating with perfect impunity behind a man of straw—a medium through whom he could speculate to any extent, while he himself was shielded from all responsibility. That was an entirely new principle in our commercial legislation, and it had no parallel in what had been done in our legislation with regard to public companies, to whom the protection of liability was applied because it was only by that means we could get a number of individuals to combine and carry out those great works by which this country was distinguished. There was no analogy be- 2126 tween that case and the application of limited liability to the undertakings of private partners. The principle was new, and it was one against which he strongly protested. He could not think that on a question of this kind the Government were justified in giving a silent vote. They ought to take a decided part on a measure which was giving a new character to the trade of the country, and the House in considering this subject should bear in mind that it was not under the limited liability system that this country had attained its commercial pre-eminence.
§ MR. GOSCHEN
said, that so far from the Bill enabling a speculative capitalist to take shelter behind a man of straw, under its operation the whole world would know the amount put into a partnership by the capitalist, and to the extent of their capital the partners would be able to obtain credit. It was said that in these cases the profits were unlimited, while the loss would be limited to the amount invested; but the profits would also be limited, for the whole trading community would be aware through the registry of the credit to which the partnership was entitled. Unscrupulous people were at present able to obtain much more credit than they would when a register was kept through which creditors would know the amount of the investments, and, therefore, under a system of limited partnership credit also would be limited. The present system was much more open to the charge than that which the Bill would introduce. The object of the Bill was to remove what was really a restriction upon trade, and to establish a natural state of things—to establish perfect freedom of contract; and the onus of showing that it would lead to excessive credit rested with the opponents of the measure. It was not the business of the House to prevent or stimulate enterprise or speculation, but it was their business to clear the field so that individuals might take their own course.
§ MR. BUCHANAN
said, he could not support the Bill, because he believed that its effect would be to place within available reach of the unscrupulous capitalist a powerful machinery for fraud. The registry would not show the real amount of bonâ fide capital invested, because parties might enter unsaleable goods, unseaworthy ships, and other property, at valuations which would be subject to no test.
§ MR. ALDERMAN SALOMONS
reminded the House that it was impossible by this or any other measure to make people com- 2127 mercially moral when they chose to adopt an opposite course. He did not believe that any large firms would avail themselves of the provisions of the Act; and its real effect, as he regarded it, would be to strengthen weak firms without ruining the strong ones. He thought also that its effect would be to invite the assistance of enterprising traders to the small capitalists, and thus supersede the present undesirable method of raising money by bills.
§ Amendment, by leave, withdrawn.
§ Main Question put, and agreed to.
§ Bill considered in Committee.
§ (In the Committee.)
§ Clauses 1 and 2 agreed to.
§ Clause 3 (A Limited Partnership may be formed).
MR. T. BARING
proposed the insertion of words requiring all such partnerships to be distinguished by the addition of the word "limited" to the name of the firm in all its dealings and transactions.
§ MR. BUCHANAN
said, the argument was that the great use of the Bill would be to enable young men to be supported by capitalists. This assumed that there would be no capital in the hands of the general partner, and that the only capital would be contributed by a person whose liability was limited. He thought that it was necessary to attach a mark to such a firm, but he suggested that, instead of the word "limited," the word "registered" should be employed.
thought that when a certain firm changed their mode of conducting business the fact ought to be notified to the public.
§ MR. W. E. FORSTER
thought that the objection of the hon. Member (Mr. T. Baring) would be met by Clauses 9 and 13.
MR. T. BARING
would substitute the word "registered" for "limited," but he must divide the House if his Amendment was opposed.
At the end of the Clause, to add the words "and all such partnership shall be distinguished
by the addition of the word 'registered' to the name of the firm, in all its dealings and transactions."—(Mr. Thomas Baring.)
§ MR. ALDERMAN SALOMONS
objected to the word registered, as putting him in mind of the shirt collars and trousers that were constantly advertised. [Laughter.]
§ MR. BRIGHT
said, he was quite satisfied that if the Committee adopted Mr. T. Baring's suggestion they might as well get rid of the Bill altogether. If it were insisted that every firm under the provisions of the Bill should put on its signboard, as on its invoices, the word "registered" or "limited," that would interfere to a great extent, and probably altogether frustrate the objects of the Bill. The business of a firm affected its connections, and no one else; and those interested would take care to make the necessary inquiries. People in business were not so fast asleep as not to be alive to their interests in such matters. He hoped his hon. Colleague would not consent to the Amendment. He would advise him, in fact, not to go on with the Bill if such a proposition were carried.
§ SIR FRANCIS GOLDSMID
could not understand why the Amendment should be objected to, as the word "registered" was so often repeated in the Bill.
MR. T. BARING
remarked that if, as stated by the hon. Member for Birmingham, the Amendment would prove fatal to the Bill, one could only infer that the object of the measure was deception.
§ Question put, "That those words be there added."
§ The Committee divided: — Ayes 12; Noes 20: Majority 8.
§ And it appearing on the Division that 40 Members were not present in the Committee; Mr. Speaker resumed the Chair.
§ House counted; and 40 Members not being present,
§ House adjourned at One o'clock.