HC Deb 05 July 1871 vol 207 cc1185-94

(Mr. Norwood, Mr. Whitwell, Mr. Monk, Mr. Serjeant Simon.)

Order for Second Reading read.


, in moving the second reading of this Bill, the object of which was to secure the registration, for general reference, of the names of all members of a trading concern which did not appear in the title under which the firm carried on business, said, that the Bill was designed to remove inconveniences that were constantly occurring in the transaction of business, to purify the commercial atmosphere, and to put an end to fraudulent and vexatious proceedings which prevailed under the present system, peculiar to this country, of allowing persons to carry on business Tinder names which were not those of the members of the firm. It was a common circumstance for a firm established long ago to be carried on under its original title by persons of different names, and, no doubt, it was an honourable thing to succeed to the prestige of a well-known and long established house; but the absence of any registration of the names of partners opened the door to fraud, and involved commercial men in great inconveniences—for instance, there was no law to prevent any man from trading under the name of a Baring or a Rothschild. The Bill proposed a system of registration whereby the Christian and surname of every person in every firm should be entered. There was very little hardship in the proposal. It was already done in the shipping trade, by brewers and distillers, and by attorneys and bankers. The proposal was a reasonable one, and if adopted would be of great advantage to the trading community, and it would remove the legal difficulty that so frequently arose when it was necessary to sue on a bill of exchange, and which consisted in the fact that before a writ or summons could be issued against a firm, it was necessary to give the respective names of the persons bonâ fide carrying on the business. There had been cases in which judgment had been obtained, and execution issued against a man, before it was discovered that the property to be seized was not that of the individual, but that of himself and of his partners whose existence had been concealed. The question had for a long time occupied public attention both in the commercial and legal worlds. In 1856 the Chamber of Commerce of Manchester brought the subject forward. It was followed up at the meeting of the Social Science in 1857. In 1858 the Marquess of Ripon, then Member for the West Riding, brought in a similar Bill to that, when a long debate took place upon it, and the preponderance of opinion was decidedly in its favour; and, subsequently, Mr. Scholefield, when Member for Birmingham, attempted to legislate on the subject. The whole commercial community, so far as could be ascertained, was in favour of it. Petitions had been presented in support of that Bill from all the principal commercial towns in the country, and not one against it. Two Petitions had been presented from Scotland—one from Edinburgh, and the other from Glasgow—approving its principles, and praying that its provisions might be extended to that country. The Belfast Chamber of Commerce had expressed an opinion in its favour, and that it might be extended to Ireland. Partnerships were compulsorily registered in Holland, Belgium, Spain, Austria, Germany, and Russia, none of these countries being devoid of mercantile knowledge and experience, and he was not aware of any reason why a measure of this kind should be rejected in England, which boasted so much of commercial morality and honesty. He had received a host of communications from mercantile men, all of whom complained of the difficulty they experienced in ascertaining the names of the actual partners in firms with which they were invited to deal in business. The Mercantile Commission of 1825 reported in favour of the principle of that Bill, and his opportunities of knowing the feeling of the commercial community of the present day enabled him to state that they greatly approved of the measure. He had not yet heard any hon. Member deny that a Bill of that kind would tend to heighten the standard of commercial morality in this country, and that was an object of great importance; nor had he heard from anyone outside the House any argument which really struck at the principle of the Bill. He now asked the House to agree to the second reading, in the belief that it would surety put a stop to immorality in commerce, and tend to regulate the prosecution of business in this country.


seconded the Motion.

Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Norwood.)


said, the Chambers of Commerce in the great towns of the North were, as far as he was aware, unanimous in favour of the principle of the Bill. He had presented Petitions to that effect from the Leeds Chamber of Commerce, from the Associated Chambers of Commerce, and from London bankers. For many years the opinion had obtained among the commercial classes, especially among bankers, that it was absolutely necessary to put a stop to the fraud which now prevailed extensively, and this end might be attained if they had the means of ascertaining the value of partnerships the composition of which was not indicated in the title of the firm.


, in supporting the Bill, remarked that, as a banker, he could testify to the inconvenience which was daily experienced from the absence of information respecting the value of firms.


said, he was also glad to have the opportunity of supporting a Bill of that kind. After hearing such arguments as had been advanced in favour of secrecy, it was quite refreshing once more to set about doing business in an open, bold English style; and he hoped the hon. Members whose names were printed on the back of the Bill would be found opposing the Ballot.


said, if hon. Members who supported the Bill really believed it would answer, there was no objection on the part of the Government to that measure. At the same time, he thought it his duty to point out that a Bill of that kind would throw a considerable burden upon a large class of traders. He could well understand the propriety, where exceptional powers were given to joint-stock, railway and other companies, of accompanying those powers by an obligation on the part of the companies to register themselves. The same remark was applicable to ships, though the shipping interest was subject to a separate code of laws of its own. But he questioned whether it was desirable, or whether it would be popular, to insist upon the registration of every partnership in the kingdom, no matter how small the firm might be or limited its existence, for that Bill would legally apply to the smallest class of partnerships. To take an extreme case, it would even apply to a costermonger if he should enter into business with another costermonger whose name did not appear on the cart; and it would impose a penalty of £20 if the firm failed to register itself, and a further penalty of £20, in the event of a dissolution not being registered also. These two costermongers would be required to give as many particulars respecting the nature of their calling, the number of their warehouses, shops, &c., as if they represented a great mercantile firm. Upon such traders, and on the poorer classes generally, that Bill would have a burdensome effect. The House had to consider, therefore, whether the inconvenience would be counterbalanced by the benefits of the measure. His hon. Friend who introduced the Bill (Mr. Norwood) observed that a register was wanted in order to show precisely with whom the merchant was dealing. But it appeared to him that with regard to the higher class of traders, who he might consider as being fairly represented by the various Chambers of Commerce throughout the country, that was an attempt to substitute a register for the better means of getting information which now existed—namely, by inquiries respecting the position of customers. When his hon. Friend contended that the Bill would do away with all commercial frauds, he appeared to take a too sanguine view of the question; for that result of the measure was a very questionable one. If it did anything, the system of registration proposed might lead to the creation of new frauds. This was a case in which it might undoubtedly be— Better to bear the ills we have Than fly to others we know not of. According to the Bill registration was to be taken as primâ facie evidence of partnership, and fraudulent traders using that register for gaining credit would know that they would be looked upon as partners until their actual character was detected. So that the Bill, while avoiding one kind of fraud, was liable to fall into another. Having formerly opposed the principle of the Bill, he did not now see sufficient grounds for changing his opinion with reference to the possibility of carrying it out. If, however, this measure was desired by the commercial classes, let them try it. All he thought it right to do was to point out the legal results which might follow if a Bill of that kind were passed.


said, he agreed very much with what had fallen from the hon. and learned Gentleman the Attorney General. No doubt registration would be useful to great traders; but in the case of small traders he (Mr. Henry) feared the difficulties of earning it out would be insuperable, particularly in small country towns and villages, where it was not unusual for persons who had been in domestic service to set up shops by the help of acquaintances who entered into quasi- partnerships. And even in the case of great mercantile houses, it would by no means afford the protection which his hon. Friend the Member for Hull (Mr. Norwood) claimed for it. What was to prevent anyone from changing his name as often as he pleased? John Smith had only to execute what is called a "deed poll," and forthwith he became John Coutts, and might trade as Coutts and Co. without let or hindrance. Some few years back a Mr. Jacob Bugg became all of a sudden Mr. Norfolk Howard—and thus any man or any number of men might change their names, and trade under any designation they liked. It was the substance, not the name, that must be looked to, and no Acts of Parliament could do for a man that which he ought to do for himself—that was, to inquire carefully into the character and standing of those to whom he intrusted his money; but, on the other hand, he might easily be led into a false security if he relied too much on such a system of registration as was now proposed, and which he had plainly showed must, to a great extent, be illusory. The Bill, moreover, would require very careful revision; for, in particular, the 15th clause, under which the entries in the books would be primâ facie evidence of the facts therein stated, was fraught with extreme danger. What was to prevent a fraudulent person from registering anybody as his partner in some remote quarter of the kingdom, and the first time the victim became aware of it, might be by receiving a summons to pay up, or a declaration of bankruptcy against him, when, according to the Bill— The original entries in the books by this Act directed to be kept shall be primâ facie evidence of the truth of the facts therein stated in any action or suit or other proceeding. If the Bill passed, it would require a very searching investigation in Committee; and, indeed, he did not know of any subject which was more deserving of an exhaustive examination by a Select Committee of that House. He hoped the principle of the measure would be thoroughly sifted by hon. Members who were not engaged in commerce, but who were acquainted with the habit and requirements of the poor who made up the great body of the traders of this country, for it would be difficult to make many of them understand how they were to carry out the law. It was different with bankers, between whom and the great mass of people engaged in small trades there was no analogy. Particular and well-recognized traders, such as bankers, shipowners, and the like, might easily be registered; but to attempt to register all traders, no matter how small or humble they might be, would require a book like the Grand Livre do Rentes, of France, and, from the incessant alterations, would be extremely difficult to keep correct. He confessed also that he had a great dislike to any extension of a system which would enable a common informer to recover ruinous penalties from poor and ignorant people by the aid of the summary jurisdiction of magistrates, and, on all those grounds, he hoped that great care would be exercised before final legislation.


said, he also hoped the Bill would be sent to a Committee upstairs. Although the Bill, like most Bills drawn by private Members, would require many alterations, it nevertheless embodied a principle which he trusted would be affirmed by the House. Everyone who was familiar with the Courts of Law knew that an action might be brought against one partner in a firm, and that on a plea of abatement being entered the plaintiff would have to begin again. Besides, a verdict might be obtained against one partner who was insolvent, while there might be in a firm several unknown partners who were perfectly solvent. In the commercial circles of the West Riding of Yorkshire there was an almost unanimous opinion that this Bill was founded on a good principle, which, stated plainly, was that people should be liable for their own actions, and that all partners should be registered. As to small traders being affected by a measure of that description, his own experience induced him to believe that partnerships rarely existed among the lower classes. All that seemed to be done was for one person to lend money to another in the hope of obtaining heavy interest for it, that hope depending upon the success of the investment in trade. But wherever there were partnerships, even among small traders, there registration would be useful.


said, he should be better pleased if the hon. Member for Boston (Sir. Collins) had stated some facts in proof of the necessity for a Bill of that kind. A few years ago, when a similar measure was brought forward, he (Mr. Potter) ascertained that, in Manchester alone, there were from 4,000 to 5,000 partnerships. What value would be a register for all England? From the mere fact that 200,000 to 300,000 partnerships would have to be registered, it would be so cumbersome that he questioned whether it would ever be referred to at all. Again, registration would be useless because it would afford no information as to the capital and standing of a firm, and therefore, in that case, would not cure immorality in business. Much was said about losses. For his part, he did not think the amount was great in careful trading, probably not more than 8 per cent per annum.


said, he was of opinion that, as the Bill would change the law as it had existed in this country for centuries, it would be desirable to withdraw it for the present, and to appoint a Select Committee next Session to inquire into the law on partnerships, and the desirability of establishing a system of registration.


said, he was of opinion that the present state of the law was very unsatisfactory. The Limited Liability Act had proved to be not only a failure but a disgrace. He hoped that the subject would be discussed before a Select Committee. The costermonger would sell his greens in his own name, or without any name at all, irrespective of the interests of any person as a partner. The magnitude of the English trade was a reason why regulations were required. Any member of a firm could, on a penny stamp, convey away the whole of the property of the firm by a stroke of the pen, while a man was entirely unable to divest himself of the character of a partner in less than a month. Individuals took the name of extinct firms. And what was the object? To obtain credit, which their own names would not command.


said, it was a well-understood maxim that publicity in business meant honesty, and that secrecy meant fraud. The members of a limited company, often thousands in number, were obliged to publish their names and addresses, and why should not the members of private firms be likewise compelled to do so?


said, he thought great inconvenience would be caused to small traders by a system of registration, and hoped the second reading would only be agreed to on the understanding that the Bill should be referred to a Select Committee.


said, he thought the Bill a necessity. He had himself experienced a good deal of inconvenience, and, in one instance, loss, from the absence of a system of registration in that country. When an English firm established a branch abroad it had to register all the names of the partners; in England there was no such necessity. In the Bankruptcy Court a father was supposed to be a partner of his son; but the son became bankrupt, and it then became manifest that the father had been a creditor under a bill of sale, and had swept away all the son's property. He hoped the House would, by reading the Bill a second time, affirm its principle, and then refer it to a Select Committee.


said, there could be no doubt that a system of registration, so that the names of all the partners in a firm would stand revealed, would prove to be a great convenience. He therefore hoped the Bill would be read a second time, on the understanding that it should be referred to a Select Committee.


said, it seemed to be agreed on all hands that some registration was necessary. The question was, whether that Bill would carry out the general wish? There would be great difficulty in carrying out the measure in consequence of the multiplicity of its details, and he must say that he agreed with the hon. Member for Galway (Mr. Henry) in his objection that the provision contained in the 15th clause, making the original entries in the books required by the Bill to be kept primâ facie, evidence of the facts therein stated, was fraught with extreme danger. He, however, would consent to the second reading on the condition that the measure should proceed no further in the present Session, but that it should go before a Select Committee in the next.


said, he could see no objection to the principle of the Bill, for only those who desired to conceal their names under the guise of an old-established firm would show any hesitation in accepting the proposal that traders should register their names. He thought the Bill should be read a second time, and referred in the next Session to a Select Committee.


said, he was perfectly content with the result of that debate, and, having no desire to press the subject hurriedly, or to carry his proposal by surprise, would accept the suggestion to inquire into the whole of the subject to which the Bill referred by means of a Select Committee next Session.

Motion agreed to.

Bill read a second time, and committed for this day two months.