HC Deb 05 March 1867 vol 185 cc1397-416

Order read, for resuming Adjourned Debate on Amendment proposed to Question [27th February], "That the Bill be now read a second time;" and which Amendment was, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."—(Mr. Fildes.)

Question again proposed, "That the word 'now' stand part of the Question."

Debate resumed.

MR. NEATE

said, his object in moving the adjournment of the debate on a former occasion was to give further time for the consideration of the provisions of this Bill. They talked of applying the strict principles of political economy to the measure, but he saw no reason why they should not be made to give way under certain circumstances. The principles of political economy had been made to give way in many cases—for instance, in our sanitary laws—and if the Stock Exchange so abused their liberty as to endanger the stability of the pecuniary interests of the public, Parliament had a right to step in and purify its atmosphere, enlighten their consciences, improve their morality, and, if necessary, control their transactions. There was an important distinction between shares in joint-stock banks and the shares of other companies. With regard to rumours circulated to the disadvantage of railway companies, it only injured those who were weak enough or credulous enough to listen to them; but in the case of joint-stock banks, a rumour of that kind affected the stability of a bank, and a run upon the deposits of one bank spread with rapidity to others, and thus affected the credit of the country. Many of these banks were also banks of issue, and thereby the currency of the country was affected. These joint-stock companies were limited in various ways, and therefore it was not just to apply to them the strict principles of political economy. It might, however, be said that it would be dangerous to depart from those principles in regard to these companies, because the adoption of such a course would lead to such an interference being carried further. It was contended that freedom of trade partly consisted in leaving people to calculate chances; but still it was the policy of the law to reduce to its minimum the element of uncertainty in financial transactions. But look at the difference between transactions of the Stock Exchange and the commercial operations of those persons who brought to our shores that which was the essential wealth of the kingdom. It was commonly imagined that the men of the Stock Exchange were better acquainted than other people with the affairs of Europe. So far, however, from that being the case, there was not a more ignorant set of people in the world, [Laughter.] He meant to say that their success was a proof of their own ignorance. The only chance for a stockbroker to be successful was not to know whether Berlin was the capital of Prussia or Vienna the capital of Austria. All that a stockbroker knew was what certain great people who represented great interests were doing, or who were the friends of particular people. They bought shares, not for themselves, but for others, and the information they obtained was a sort of back-stairs information, which was not obtained, in a creditable manner or used in an honest way. The game on the Stock Exchange was like the game which children played where cheating was made fair. It was like a game at cards where all the cards were marked, and where those who were the cleverest in detecting the marks won the most money. The freedom of dealing in shares, no doubt, tended in some slight degree to increase their value, when the bank or other concern was fully established; but it was within the knowledge of many in that House that, so far from its being considered an acknowledged benefit, a great many of the best concerns in the City kept their business from the knowledge of the Stock Exchange. If they wanted to find out the best investments, they must go into the quiet corners and little squares in the City where the grass grew up between the pavement. They would there find good and honest companies from which the light of the Stock Exchange was entirely excluded. He knew something of these things, and he did not believe that any gentleman connected with the City would deny what he had stated in that respect. The dealing in railway shares might have been advantageous to the great railway companies like the Great Western, or London and North Western, whose transactions were of public notoriety and whose credit could not be affected by rumours; but the doings of the Stock Exchange with reference to them had been the means of keeping them out of the hands of a better set of proprietors and directory, and had most prejudicially affected the general railway system of the country. If it had not been from fear of the Stock Exchange, country gentlemen and landed proprietors would have held their proper place in the management of railway companies. They did not choose to have their money played with on the Stock Exchange. In the country a concern was frequently recommended on the ground that it had nothing to do with that place. He knew that it was commonly said to them, "You may safely invest in this, for it will not be known in the City." If the country gentlemen and landed proprietors had held their proper place in the railway management of the country, they would not have sold their property to each other for four or five times its value, nor would they have claimed heavy compensation for severance, for interruption of prospect, and other things which had run up the bills of companies to such an extravagant amount. The effect of the joint-stock system, therefore, as applied to railways, had been most prejudicial, and had saddled the public with an expense which was daily interfering with their safety and convenience. It was said that the Stock Exchange did no harm to the banking companies during the late panic, but that they brought it on themselves. There could be no doubt that the difficulties attending the Agra and Masterman's Bank were increased by the sort of dealing he had described on the Stock Exchange. If it had been left alone, and had not been subjected to such hard trials, it would have righted itself with much less loss to many deserving and innocent people than had been entailed by this freedom of banking. City gentlemen talked much at their case on these things; perhaps they did not embark deeply in those speculations, but they noticed the oscillation of the pendulum, and as soon as the thing burst asunder they, like wreckers after a storm, said, "It was a merciful dispensation of Providence, and all for the best, that the ship that was brought on the rocks could not be expected to live—that it was an ill-founded ship, and must have been wrecked somehow or other—the thing had done no harm to any company, and had done them a great deal of good, and that they had been enabled to invest their money at the rate of 15 or 20 per cent in the best securities." Sir John Barnard's Act had failed partly from the difficulty of procuring evidence, and partly because nobody was interested in enforcing it. It had, therefore, fallen into disuse. They had by their legislation put down gambling houses and lotteries, and had in consequence concentrated the whole gambling spirit of the country in the Stock Exchange. Having done so it was too powerful to be dealt with in that House. He only wished to deal with a part of it. It was said that the question was too difficult to be dealt with. He believed that the real objection was that it would be too easy to deal with. There could be no difficulty in carrying out the provisions of the bill, because there would be numbers of joint-stock banks anxious to do so in order to protect themselves. The bill might be an experiment; but he believed this exceptional legislation was called for in the interests of the joint-stock banks and of the public in general.

MR. STEPHEN CAVE

said, that every one must sympathize with the motive which had led to the introduction of the present Bill. A man who speculated in the misfortunes of others, and made his gain out of their losses, was not a man for whose protection the voice of any Member of that House was likely to be raised. The question, however, was whether, upon the whole, the proposed legislation was expedient, and he owned he had grave doubts upon the point. The hon. Member for Oxford had advocated the abolition of the Stock Exchange, and seemed to think country gentlemen would invest in railway shares if they were deprived of the means of selling them. But he was right in thinking that such a measure should be more general. He (Mr. Cave) felt several objections to the Bill before the House. In the first place, it was legislation which touched only one of a large class of cases which could not be distinguished in principle, though the effect upon them might not be equally mischievous. On what ground was a man to be prevented from selling on the chance of buying at a profit, and yet not be prevented from buying on the chance of selling at a profit? The former was the regular course of dealing in many trades. When the debate on the repeal of Sir John Barnard's Act took place in 1860, the cases of tallow and opium were adduced. The French were ready to sell beetroot sugar of the coming crop. The Dutch sold refined sugar for future delivery; in no case had they the goods; they took the chances of buying before the day. Nor were these practices so innocent as the hon. Member seemed to suppose. Many holders of cotton for manufacturing purposes had of late suffered much from rapid fluctuations caused by speculators. Again, as a matter of principle, was there any more reason why, when a broker was instructed to sell bank shares, he should ascertain that his principal had them ready to deliver, than when he was instructed to buy he should insist on seeing that his principal had the bank notes in his pocket to fulfil his contract? Again, on principle, the public had as much right to complain of the price of commodities being raised by speculative purchasers as shareholders had to complain that their property was depressed by speculative sales. No one would seriously propose to interfere with the former. In old times, indeed, the laws against forestalling, regrating, and engrossing were levelled against those practices, but those laws had fallen into oblivion; and it was allowed on all hands that legislative interference was mischievous, bringing the law into disfavour, and tending to its constant evasion. It was that argument which was chiefly urged for the repeal of Sir John Barnard's Act, entitled, as the House knew, "An Act to prevent the Infamous Practice of Stockjobbing"—an Act passed, it was said, by misadventure, and which had for 130 years been powerless to prevent transactions of a similar nature to those against which the present Bill was directed, There was great difference of opinion in the House in 1860 on that subject. The late Chancellor of the Exchequer wished to repeal the whole Act, relying on the Act of 1845 to prevent gambling. But the late Solicitor General (Sir William Bovill), objecting to that, brought in a rival Bill. What was that measure? It was simply a proposal to "repeal so much of Sir John Barnard's Act as prevented persons selling stocks and securities of which they are not possessed." So that the Bill before the House was doubly retrograde, both in reference to the Government Bill of 1860, which was passed, and to the more moderate and cautious measure of the present Chief Justice of the Common Pleas. Well, then, was there any special evil which would justify such special legislation? Certainly, events had taken place in the commercial world which they all deplored. It had been said that certain banks and other establishments had been pulled down by the sellers of shares spreading false reports; but the spreading of false reports was itself illegal, and visited with heavy penalties. He admitted that one argument in favour of the present Bill was that it might enable such delinquents to be fixed with what was so difficult of proof; but the real cause of the downfall of those establishments and companies had been the inherent weakness of the shareholders—a weakness which was in itself almost fraudulent. When a man bought a £50 share for instance, with £25 paid, he rendered himself liable for the other £25, and ought to be able to meet his liability. If he could not, he was prone to take fright when shares fell in price, sold at a loss to relieve himself of a liability, and played into the hands of speculators. Could it be shown that any concern had been brought to a standstill solely by the sale of its shares? Had it not been a knowledge or strong conviction of unsoundness which had caused the sales, not the sales which had caused the unsoundness? He did not mean to say that solvent companies had not been attacked by these speculators for a fall. That had been done in some well-known instances: what had been the result? Why, that the attacking party had been severe losers, because, owing either to defensive purchases or to the natural change of the market, shares were dearer on the settling day than on the day of sale. The House would see how great the risk was which these speculators for a fall ran, bound as they were to deliver what they had contracted to deliver at any price. He thought that risk was quite sufficient protection to the public in ordinary times, and it was for ordinary times only that we ought to legislate in commercial matters. He believed that the best and most wholesome check to gambling transactions was the reduction of the time between contract and delivery to the shortest possible date. He confessed he was, in the first instance, disposed to acquiesce in the measure under discussion. It was one which appealed to our best feelings; but he was afraid, on further consideration, that while aimed at gambling in shares—that was to say, at a colourable contract between parties, in which no stock was to be delivered, but the difference only to be paid according to the rise and fall of the market—while aimed against that which, according to a decision of the Court of Common Pleas, was now illegal under the 8 & 9 Vict, it would place serious difficulties in the way of entirely legitimate transactions, and they all knew that the effect of such impediments was the artificial diminution of the price of such securities as compared with others which were not affected. So that the hon. Member for York would really injure those whom he intended to benefit. In conclusion, he would say that it was because the Bill was confined and partial in its operation, because it partook of the character of panic legislation, because it was retrograde, reversing the decision to which Parliament came so lately as 1860, and because now that commercial confidence was restored—if, indeed, it was restored—it would be found inconvenient, and therefore, like Sir John Barnard's Act, become inoperative, or only operative in giving facilities for morally, though not legally, fraudulent repudiation of bargains—it was for these reasons that, although heartily sympathizing with the object of the Bill, he thought the House ought to hesitate before adopting it.

MR. CRAWFORD

said, that he would willingly have allowed the matter to rest on the statement of his right hon. Friend who had just sat down, but as one who represented the parties that had come under the invective of the hon. Member for Oxford (Mr. Neate), he felt bound to add a few words. There was no one more disposed than himself to give credit to the hon. Member for York (Mr. Leeman) for his intentions in bringing forward the present measure; but he believed that the proposed Bill would not check the practices referred to, and that it belonged to that class of exceptional legislation which the House should be very cautious in adopting. It had the appearance of legislation under the feeling of panic, and the transactions against which the Bill was directed were exceptional in character and did not often occur. The right hon. Gentleman who last spoke had rightly said that the houses which suf- fered from the operations of these speculators were in every case in circumstances rendering them suitable objects for attack, and it was notorious that with respect to banks of another class their attacks failed. There was one subject he approached most unwillingly; but the hon. Member for Oxford, when he named the Agra and Masterman's Bank as one of the establishments which failed entirely in consequence of the proceedings of those speculators, stated that which was not at all founded in fact. The cause of the suspension of that bank was that it was founded on wrong principles of business, and that it was badly conducted. If, like other banks, it could have offered sufficient securities to the Bank of England, it would have received assistance. He would now say a few words on the constitution of the Stock Exchange and the nature of the transactions there carried on; because he did not believe that ten men in the House unconnected with the City understood the nature of its operations. The gentlemen of the Stock Exchange consisted of brokers and jobbers or dealers. The brokers were persons who bought or sold for clients on commission, while the business of the dealers was to deal in certain shares, stocks, or securities, which they selected for the purpose, neither buying nor selling for clients on commission. The dealers were always ready to buy or sell at a price. A broker having stock to sell or buy went to a dealer and asked him to name a price for the stock he dealt in. The dealer named a price, and at that price he was bound to purchase or to sell. The advantage to the public of this kind of transaction was considerable. If a person possessed of a certain amount of stock—to the amount, for instance, of a broken sum, like £8,550—wished to sell, his broker went into the market, and sold the whole amount to a dealer at its fair market price. Such operations as that would, however, be put an end to if the present Bill were to pass; and then the selling broker would be compelled to try and find some one desiring to buy the same amount as he had to sell of that particular stock, which in many cases he might not find it easy to do. The broker would also be obliged by the Bill to declare the respective numbers of the shares, or the seller's name. Now, in the case of a bank, if it were published that the principal person connected with it was selling the bank shares, their price would go down immediately, and he would not be able to get the fair price for them. Under the existing system the dealer was a most useful man, the person of the highest honour, and necessarily possessed of capital. The hon. Member for York had on a previous occasion referred to the committee of the Stock Exchange in a manner, though it might not be so intended, calculated to disparage that institution, and had complained of a certain resolution adopted by a majority of 15 to 12 out of a body consisting of thirty members; but what had happened since? Either at the end of last week or yesterday, these thirty gentlemen had been summoned to attend again; nineteen attended, and they came to the conclusion that this Bill ought not to be proceeded with by a majority of 18 to 1. The hon. Member for Oxford had characterized the people of the City as "wreckers." He seemed to be under a sort of impression that people sat there as crows on a tree, watching the progress of the plough to see what would be turned up. No one could agree with such extraordinary sentiments. It was said that collusion would take place, and that fictitious sales were made on the Stock Exchange. He begged to state on authority that fictitious sales never occurred there, and that collusion was impossible from the way in which business was carried on. The only object of collusion could be to sell the price of particular stock down; but what would be done if the price of any stock went down in an extraordinary degree? If a sale was recorded or put up at a great margin below the market price of the day, inquiry would be instantly made by the committee as to who was the seller, and what was the cause of the great fall in price. If there was collusion it would come to light instantly, and any parties who had lent themselves to such a transaction would be immediately expelled the house. The method pursued by the Stock Exchange secured equability of price, and that was one of the great advantages it gained for the public. The persons against whom this Bill was directed were not Stock Exchange men, Like Cain, they had a mark upon them. They were people outside the Exchange, and carried on their transactions by giving a commission to a broker. This Bill would not cure the evils complained of. His right hon. Friend (Mr. Cave) had so well stated his objections to the Bill that it was unnecessary to supplement them. Its object was exceptional, retrograde legislation, and it would inflict great disadvantage on the public occasionally resorting to the Stock Exchange.

MR. ALLEN

said: I think the Bill which has been introduced by the hon. Member for York, and which we are now asked to read a second time, is one of a most important character, and one which is calculated to be most beneficial to the interests of the joint-stock banks of this country. The simple object of the Bill is to prevent any sale of shares in a joint-stock bank which is not a real bonâ fide sale of shares which are actually in the market at the time for disposal. This Bill will consequently prevent all that system of bearing the market, and speculating for a fall, which has been carried on to so great an extent, and which has, in some instances, seriously affected the stability of various joint-stock banks. Now, it is important to notice that this Bill places no obstacle in the way of any bonâ fide holder of bank shares selling any shares which he may actually possess, at any time or at any price he may choose; and it likewise places no obstacle in the way of any bonâ fide buyer buying any shares which may be actually in the market; but, on the other hand, it does strike at the very root of that rotten and gambling system of buying and selling shares which are not in the market for disposal, on the speculative chance of procuring them by a certain day on paying the difference in price. Now, it has been asked, why should not this Bill be extended to consols and railway shares as well? and to this I answer, that there is not the same necessity for restriction in those as there is in the case of bank shares, because their stability cannot be damaged in the same way by a combination on the Stock Exchange. Take, for instance, the case of consols. You may indeed, by bearing the market to a great extent, bring down the price of consols in a fractional degree; but you cannot materially affect them, and you cannot at all affect their security, because they are backed up by the whole wealth and credit of the nation as security. Then, again, with respect to railway shares, you may indeed, by a combination on the Exchange, bring down the price of the shares of any particular line; but still you cannot materially affect them, because railways are not dependent in the same way on credit for their stability as banks, and, above all, from the fact that the borrowed money of a railway is borrowed on debentures for a term of years, and cannot be suddenly called in in case of a panic. But, on the other hand, under the present system joint-stock banks are entirely dependent on their credit for their very existence in this way: a joint-stock bank, with a paid-up capital of say £1,000,000, will probably have deposits to the amount of from £5,000,000 to £15,000,000. Now these deposits, amounting to between five and fifteen times the amount of the entire paid-up capital of the bank, are at call, or at a very short notice; but, on the other hand, the banker is obliged to employ them in his business in discounts and advances, by which they are locked up for one, two, three, or more months, as the case may be, thus rendering them not available for a sudden emergency. Now, this being the case, the bank is entirely dependent on its credit with the public for its stability; because the banker labours under this great disadvantage, that he is a trader who trades for the most part with borrowed capital, and with borrowed capital of the most dangerous description, as it is liable to be demanded from him at a moment's notice. And the consequence of this is, that, as he is dependent on his credit for his stability anything which shakes the credit of his bank alarms the depositors, who hasten at once to withdraw their deposits; and, whether there is just cause for alarm or not, if a run on the bank takes place of a sufficiently severe character, the soundest joint-stock bank must stop payment, from the inherent weakness of the present system—that their deposits are at call, while the banker is compelled to employ them in the legitimate course of his business for a lengthened period of time, so that they are not available if suddenly called for. Now, this being the case, a combination on the Stock Exchange by interested parties, by means of fictitious sales, coupled with rumours as to a bank's soundness, may very soon bring down the price of the shares of any particular bank; and this without a single share being actually in the market, and without a single bonâ fide holder offering his shares for sale. Then when depositors see that the shares of a bank are falling in price, and hear of rumours against its soundness, they very naturally feel alarmed, and begin to withdraw their deposits; and if the withdrawal of deposits goes on to a certain extent the bank must become embarrassed, and ultimately suspend payment; and all this mischief having arisen from a combination on the Stock Exchange to injure a bank by means of these fictitious sales. But it has been said that this Bill is an interference with the freedom of trade, and I boldly assert that it is nothing of the kind, because it will not place the slightest chock on any real bonâ fide sale of shares; it will only prevent that cruel and wicked system of bearing the market which has brought ruin to hundreds of innocent persons. This Bill cannot injure any one, except it be a few dishonest and unprincipled stock jobbers; and when, on the one hand, there are the interests at stake of the great classes of shareholders and depositors in the different joint-stock banks of this country, and, on the other hand, the interests of a few unprincipled men, who care not for the amount of misery they inflict, I trust the House will not hesitate for a moment as to its decision with respect to the second reading of this Bill.

MR. BASS

said, he should oppose the second reading of the Bill. There was in the late panic not a single bank which failed that did not do so through some inherent weakness. He had received communications from many commercial men, to the effect that in their opinion the Bill of the hon. Member for York (Mr. Leeman) would operate most injuriously to the holders of shares. So far from its being a protection to them it would be almost impossible after the passing of such an Act to have any large transactions in the shares of joint-stock banks, for no broker would hold £20,000 worth of such stock in hand on the chance of meeting with a purchaser for so large an amount. On the one hand, the public would be the sufferers by the limitation of the business; while, on the other hand, the shareholders, instead of finding a ready sale for even the largest number of shares, would have to haggle with buyers, who would probably only buy a few at a time, and the consequence would be that the market being so restricted they would fall in value accordingly. Again, it might operate very injuriously to individuals; because, whenever a large number of shares were offered for sale, it would get abroad that Mr. So and So was selling his bank shares, and probably the effect would be that when 100 out of say 500 were sold, there would be no market for the rest. The House would do well to recollect that there could not be "bears" without "bulls;" there could be no sellers where there were no buyers. Both buyers and sellers were bound to look after themselves, and the less Parliament had to do with them the better.

MR. WEGUELIN

said, he was afraid that the opinion of the House was against the Bill, but he thought a good deal was to be said for its principle. He could not agree in the statement of the hon. Member for Derby (Mr. Bass), that no joint-stock bank failed in the panic that was not inherently weak. Could he point to a single one in which now, after the panic was over, the creditors did not expect to get every farthing of their money? and if so that was a proof that, had it not been for the alarm and consequent run, and had they had time to call in their capital, or even their securities, they would have been perfectly solvent. Such operations as those complained of by the hon. Member for York (Mr. Leeman) would, if persisted in, go far to ruin almost any bank. Their object was to cause a run on the deposits, and thus lower the price of shares. The House knew that, even in ordinary times, it was almost a ruinous thing for a bank to make a call. The public, who were depositors, immediately took the alarm, rushing to the conclusion that the bank must have made some enormous bad debt, and at once proceeded to withdraw their deposits, thus precipitating a catastrophe which would never have taken place but for the operations complained of. The only resource a bank had was its credit. The business of a bank was carried on with other people's capital, and any blow to its credit that induced depositors to withdraw their capital must lead to its ruin. Taking the best and most substantial bank in London—the London and Westminster—it would be found that the £20 shares were worth £95, £55 of which represented the value of its good-will and credit, and this part of their property was exposed to the attacks of unprincipled speculators, combinations which it was the object of the Bill to destroy. The limitation of the sales to those of actual shares would not in the least limit the real bonâ fide business, and although it was quite true that it would limit the speculative transactions on the Stock Exchange, the sufferers would be clearly not the public, but the stockbrokers, who formed these combinations. It was said that the law would be constantly broken—that Sir John Barnard's Act was; but that might equally be said of all laws. In legislation affecting interests it was a right principle to give the greatest weight to the interests of the greater number. It was plain that there were concerned in these matters two parties, one including shareholders, depositors in banks, and the general public, who were injured by the combinations complained of; and on the other side the stockbrokers for whose benefit these combinations were made. He asked which of these parties ought to be most considered? It was all very well to reason calmly now that there was no crisis, and men said how foolish it was in shareholders to be alarmed. But he was not at all sure that if there were a financial panic at this moment a Bill of this kind would not receive the support both of the Vice President of the Board of Trade (Mr. Cave) and the hon. Member for London (Mr. Crawford.)

MR. MILLER

said, he should support the Bill, considering that the reasons advanced against it were entirely fallacious. One of the arguments used was that it would curtail transactions in banking shares. That was not a consideration for the public, though it might be for sharebrokers and stockjobbers in the City. The hon. Member for Reading seemed to think that if people put money into a business which they did not understand and lost it, it WHS their own fault, and there was nobody to blame. He could not subscribe to that doctrine, neither could he believe that in such cases widows and orphans were not entitled to the protection of the law. The Member for Finsbury had mixed up two questions when he opposed this Bill on the ground that it was an attempt at legislating for trade. He (Mr. Miller) had always understood that the evils which the Bill was intended to meet sprung from illegitimate trade. What were the means adopted by these conspirators when they thought they could get a profit by trading on the fears of shareholders? They marked out a particular bank, got at the names of the depositors, scrupling not to employ bribery for that purpose, and then, having spread false rumours, brought them to the notice of the depositors in anonymous letters; while, on the other hand, they wrote anonymous letters to shareholders, advising them, if they wished to save anything, by all means to sell. Why did they do this? Because they themselves had sold large numbers of shares of a fictitious character to be delivered on a certain day, and the difference between the price of the shares on that day and the higher price at which they had sold them would go into their own pockets. He thought this Bill should pass, if only as a tentative measure. It did not go beyond banking shares; and, inasmuch as banking was an exceptional business, it was entitled to protection against such unholy combinations.

MR. CLAY

said, that although banks subject to the attacks of conspirators might not be broken they were always grievously injured. It was not the custom for banks to keep sufficient money in their drawers to meet extraordinary emergencies. The soundest bank in the country, of which he had been one of the first six shareholders, never kept in its drawers sufficient to meet an extraordinary emergency, but only sufficient to meet ordinary requirements. Therefore, in a case of an extraordinary emergency money must be realized, and securities must be sold at a depreciated value, all of which would be prevented should the Bill of his hon. Friend become law. The evil complained of was of no modern date. Fifteen years ago an old-established, highly respectable, and perfectly solvent institution, paying a moderate dividend of £8 per cent, actually lost £70,000 in one half-year by the spreading of these wicked reports. He attached very little importance to the resolution passed the other day by the stockbrokers, because they would naturally be opposed to any measure which was likely to restrict their business. He could not agree with the hon. Member for the City of London (Mr. Crawford), that this measure, if passed, would be inoperative; nor could he agree with the right hon. Gentleman the Vice President of the Board of Trade (Mr. Cave), that the restrictions which it would impose would affect the value of banking shares, because he did not believe that such sales as those which it would prevent, raised the value of securities. The shares in the old waterworks and insurance companies never came upon the Stock Exchange, and yet he had never known any one experience difficulty in selling them in a day or two. The Bill might need some amendment in Committee, but its principle was a sound one.

MR. MILNER GIBSON

said, that there could be no question that the circumstance, that a security could be immediately turned into money, increased its value. In some cases, weeks elapsed before sellers of the class of shares referred to by the hon. Member for Hull (Mr. Clay), could obtain their money. This Bill provided that dealers should not sell the shares of joint-stock banks unless they complied with certain formalities. If the observance of those formalities was impossible or inconvenient, dealers might refuse to trade in these securities, the trading in which, without those formalities, would subject them to be punished for a misdemeanour. That would place the shares of joint-stock banks at a disadvantage in comparison with all other shares, because it would be almost impossible to convert them readily into money. He considered the middle men, or jobbers, on the Stock Exchange a most valuable class, and was surprised that disparaging remarks should have been made with reference to them. Undoubtedly their dealings had a tendency to support prices, and therefore they benefited the holders of this kind of stock. Seeing the enormous amount of this kind of stock that was held by the public, it was to the public advantage that there should be a ready means of disposing of the shares in the market. If the law was not strong enough to reach the conspiracies of which complaints had been made, he should be glad to see it strengthened; but he believed that if this Bill was passed, the remedy would be worse than the disease.

MR. PEASE

said, he desired to say something in behalf of the commercial public. Those who had watched the panic of Inst year knew that the commercial public had suffered more than any other body from its consequences. The right hon. Gentleman who had last spoken highly appreciated the services of middle men. He appreciated them very lightly, especially in relation to banking shares, and if bank shareholders were polled to-morrow they would be found of the same opinion. They would rather do without the middle man, even at the cost of accepting a less price for their shares. He appreciated the difference between moral and immoral trading, and he would therefore vote in favour of the Bill, in the hope that it would stop the plottings of the blacklegs of the town.

MR. THOMAS CAVE

said, he was too deeply interested in this question to permit himself to give a silent vote. He had listened with pain to the seeming levity with which the hon. Member for London (Mr. Crawford)—he had almost said Member for the Stock Exchange—had treated the subject. It was absurb to say that this Bill would depreciate a bank's shares when its chairman sold any quantity, because everyone knew that now, even without the Bill, the fact that such a sale had been made was known in a few days, because a transfer must be signed. The hon. Member for the City forgets the widows and orphans and other holders in joint-stock banks who suffered by the panic of last year. The hon. Member for Oxford (Mr. Neate) had overstated the case, but there was a good deal of truth in what he had said. There were no doubt many honourable men engaged in transactions in these shares, but there were unfortunately a great many others who fully deserved the appellation of "wreckers." Good banks did go down in consequence of this wrecking system. He knew of a good bank that was placed in the utmost peril by this system. It required the assistance of its friends and customers to carry them through it. He was afraid the hon. Member for York (Mr. Leeman) had damaged his own case when in introducing the Bill he had spoken ill of the members of the Stock Exchange, who were a very estimable body. The Stock Exchange had been too often regarded as the offender. He, however, knew of a case in which an auditor who thus had access to the books of a certain bank, had become possessed of information as to a weak point in its affairs; he thereupon sold 3,000 of its shares which he did not possess, then circulated damaging reports about the concern, brought the shares down with a run, bought in before his settling day, made a fortune, and retired from business.

MR. H. B. SHERIDAN

said, he thought that his right hon. Friend fell into error in supposing that this Bill, if passed, would put an end to the transactions in bank shares on the Stock Exchange. Those transactions were confined to two sets of dealers—those who dealt having shares to sell, and those who dealt having no shares to sell. Those who had shares to sell by legitimate directions from their clients, would sell them with more satisfaction if this Bill would pass than at present. He would support the Bill because he believed it would give great satisfaction to all bonâ fide holders of stock, and because the banks throughout the country were in favour of it.

MR. LEEMAN

said, he must call attention to the remarkable changes which had taken place in the minds of certain hon. Members in regard to this measure. The hon. Member for Grimsby (Mr. Fildes) who moved the Amendment had expressed to him on a former occasion his satisfaction that the Bill, as originally introduced, had been reduced so as to apply only to joint-stock hanks. ["No, no!"] The hon. Member said "No;" but he (Mr. Leeman) had in his hand the original Bill, with the words, "and other joint-stock," obliterated by the hon. Gentleman, and the words, "joint-stock, finance, and other companies," written by him in the margin. Subsequently the hon. Gentleman put a Motion on the paper to move the omission from the preamble of the words he had obliterated, and to make the Bill applicable only to joint-stock banks. The hon. Member for Greenwich (Mr. Alderman Salomons) made a statement on "Wednesday last in reference to the Bill which surprised him. Last year he (Mr. Leeman) prepared a question to be put to some Member of the then Government, inquiring whether their attention had been directed to the practices then being carried on at the Stock Exchange, and he showed the notice to the hon. Gentleman the Member for Greenwich, who on that occasion made the suggestion from which the Bill emanated. His hon. Friend said, "Do not ask any question; bring in a Bill." The hon. Member for the City of London (Mr. Crawford) stated that a change had also come over the minds of members of the Stock Exchange, and that whereas there had been a minority of 12 against a majority of 15, of opinion that legislation was needed—now the minority had been reduced to one gentleman, who continued of that opinion. He could not help thinking that the distance of the fatal 11th of May had operated on the minds of some Gentlemen. Hon. Gentlemen were mistaken in supposing that the great banks of the City of London were opposed to the Bill. He had himself presented petitions in its favour from four of them, and he had the authority of two others for saying that they were also in perfect accordance with the views he sought to enact by the Bill. The petitions presented from all parts of the United Kingdom left no doubt as to the opinion of the joint-stock banks throughout the country on the subject. In fact, the opposition to the Bill came only from the City of London, and the arguments were conducted as if the City only were affected. Not a single Member representing a country district had ventured to utter a word against the Bill. The Vice President of the Board of Trade was connected with one of the largest institutions in the City of London. The hon. Member for the City much misunderstood his remarks on Wednesday, when he said that he had sought to disparage the Stock Exchange. He (Mr. Leeman) appealed to the House whether he did not say, as regarded the Stock Exchange, that it was composed of gentlemen as honourable as any in England; but there were others who had allowed themselves to be the vehicles of transactions last year which required some legislation on the part of that House, seeing that the Stock Exchange would not take action to put an end to them. The reasoning against the Bill was based on the assumption that the real investors in joint-stock banks were persons who perpetually bought one day and sold another. A comparison of the names of the shareholders of those banks, published from time to time, would show that the assumption was groundless. There were no fewer than 50,000 investors in joint-stock banks, and an examination of the lists would show that they did not go in one day and out another, and that they did not require the assistance of jobbers and dealers on the Stock Exchange. It had been said that there were no fictitious sales last year. He had it from members of the Stock Exchange that not one in a thousand of those transactions resulted in actual transfer. If so, were not the sales fictitious? The sale notes were no more than mere registers of bets—records of wagers that stock on a given day would stand at the price mentioned in the sale note—and that was the state of things he sought to check. It was said also that investments should never be made except in solvent and well managed concerns. Why, the Bank of England itself many a time in the present, as well as in the past century, had been in no better position than some of the joint-stock banks last year. He hoped the House by its decision would sanction this measure, the object of which was to give security to permanent investors. It was a simple proposition, easily understood. It had been contended that the Bill would inconvenience real holders of bank stock. The fact was, that real investors were seldom in the market at all. The only persons the Bill would affect, were those who dealt in fictitious sales. The permanent investors were interested in the Bill; but there was another class also deeply interested—namely, the depositors, for whom he was desirous of obtaining the security which the Bill would afford.

MR. ALDERMAN SALOMONS

said, he had never in any way given the remotest encouragement to his hon. Friend to bring in a Bill like that before the House.

Question put.

The House divided;—Ayes 86; Noes 41: Majority 45.

Main Question put, and agreed to.

Bill read a second time, and committed for Friday.