HL Deb 16 June 1856 vol 142 cc1474-90

presented Petitions from the Directors of the Chambers of Commerce at Manchester and Glasgow against the Joint-stock Companies Bill; and said, that in presenting these petitions it was unnecessary to remind their Lordships of the great importance of the two commercial bodies from whom they proceeded. It was their peculiar function to watch over the interests of the greatest commercial communities of the empire; and, considering the high position they maintained in those important districts in which they resided, it could not be doubted that they were in every way competent to form a sound judgment upon any proposition in which a change affecting the interests of trade and commerce was contemplated. The petitioners stated their opinion to be that the measure which would come under their Lordships' consideration that evening was a most unwise and dangerous measure, and would, if adopted, be subversive of the best interests of commerce, and they prayed their Lordships not to give their sanction to its becoming law. In these views of the petitioners he most cordially concurred, for he believed the Bill to be based on principles which must tend to call into existence every species of fraud and trickery, and ultimately to destroy the high commercial character of this country. Connected with the petition from Manchester, there was a circumstance to which he would call the attention of their Lordships. When the Government issued a Commission to inquire into the state of mercantile law, thinking it their duty to put on that Commission some persons of practical experience, and who understood the wants and interests of the commercial community of this country, they very properly selected the President of the Chamber of Commerce of Manchester. That Gentleman had joined in the Report of the Commission, condemning the principle upon which this Bill is founded, and the Members of that Chamber approved and confirmed the views which their President entertained and the course he had pursued. It was said that this Bill only carried out the principles of free trade to their legitimate conclusion. Now, no person had given a more steady and devoted support to the free trade policy than he had; but he certainly should never have thought of advocating that policy if he had understood that it involved such consequences as would, he believed, result from the measures now brought forward by the Government. It surprised him that the principles of free trade should be supposed to have any bearing upon this Bill, and he trusted there would be no reference to these principles in the course of that evening's discussion; but if there were, he hoped Her Majesty's Government would have the goodness to explain how it was that they reconciled it with freedom or with equal justice to all parties to introduce a measure which gives the privilege of unlimited liability to bodies of persons seven or more in number, while they withheld it from smaller associations of individuals, thereby holding out a great artificial inducement to the transfer of concerns now carried on as private concerns to Joint Stock Companies. Perhaps the Government would also have the goodness further to explain how it was, if the principles of this measure were of such value and were worthy of universal application, that they excluded from the operation of the Bill all companies engaged in banking or insurance. Besides the petitions to which he had alluded, he was intrusted with one on the same subject from the Trade Protection Society of Bristol—a society of traders, instituted for the purpose of protecting themselves from those frauds and deceits to which they were exposed. All these petitioners complained of the partiality and unfairness of the measure; they pointed out the injustice of conferring upon bodies of more than seven individuals privileges which were withheld from trading bodies less in number; and they stated that private parties engaged in trade on their own responsibility would be exposed to an unfair competition with companies formed under the proposed enactment, because the former would be liable to their creditors to the full extent of their property, while the liability of these companies would be limited. He would now intrust these petitions to their Lordships' serious consideration. They were not mere ordinary matter-of-course petitions; but they expressed a deep sense of the dangers to which such legislation would expose those great commercial and trading interests which had hitherto been so prosperous and had justly enjoyed so large a share of credit and of the public confidence. Speaking as men of great practical knowledge and experience, the petitioners solemnly declared to their Lordships their conviction of the injurious consequences which would result from this legislation, and their belief that Parliament was about to try a formiable and dangerous experiment, and to imperil that great commercial system which had hitherto secured to this country an unexampled degree of credit among all the nations of the world, and which, if there was either prudence or gratitude in man, it was the duty of Parliament to cherish and preserve.


thought that the Government had no reason to fear the opposition of the noble Lord, because his general practice appeared to be, in cases of a similar kind, to present a petition and to make a speech against the principle of the measure proposed, but then to offer no further opposition to its progress. The noble Lord had acted in that manner with regard to the Limited Liability Act of last Session, and also with regard to the Mercantile Law Amendment Bill, passed a few evenings ago, on which occasion the noble Lord, after speaking against the Bill, left the House. He did not know whether the noble Lord intended to act in a similar manner on the present occasion, but he believed that if he continued his opposition to the Bill he would receive support, since it was diametrically opposed to the Report of the Commission of 1853.


wished to explain that on the occasion of the passing of the Limited Liability Bill at the close of the last Session, he was absent in Germany, and, with regard to the Mercantile Law Amendment Bill, he had acted with the full concurrence of those for whose interest he was contending, and in the manner which they deemed best calculated to ensure the final success of their resistance to the measure.

Order of the Day for the Second Reading, read.

LORD STANLEY OF ALDERLEY moved the second reading of the Bill. He said, that he would first advert to the petitions which had just been presented, and to the observations which the noble Lord had founded upon them. He would, then, remind their Lordships, that the principle upon which the Bill was founded had been under the consideration of Parliament for a considerable period, and that although Manchester, Glasgow, Liverpool, and other large commercial towns possessed active, energetic, and intelligent representatives in the other House, they had not expressed any apprehension by the mouths of those representatives; and the inference, therefore, was, that the apprehensions expressed by the noble Lord were shared in by a small and exclusive class, and were not felt by the large body of the community. It had been stated on a former occasion, that the Bill of last Session had been hurried through the House with indecent haste; but he would remind their Lordships that, when he asked their consent last Session to the Limited Liability Bill, he had stated that it was only a temporary measure, and he then pledged himself that a Bill should be introduced in the present Session to amend the Joint-stock Companies Act. In pursuance of that pledge, two measures had been introduced into the other House of Parliament—the Joint-stock Companies Act Amendment Bill, and the Partnership Amendment Bill, designed to meet the case of individuals and small partnerships. In asking their Lordships on the present occasion to assent to the former of those two Bills, he would shortly refer to the circumstances connected with the Joint-stock Companies Act. Not many years back Joint-stock Companies were looked upon as being out of the pale of the law, and were viewed with the utmost apprehension by commercial men. It appeared, however, so necessary in certain cases that such companies should be legalised that an Act of Parliament was passed in 1844 legalising such societies; but under certain provisions which, it was imagined, would prevent fraud. That Act provided for a provisional registration and, after certain conditions had been complied with, for a complete registration, and it required the establishment of a registry. Those provisions had been found totally useless, because scrip in provisionally registered companies was as negotiable in practice as scrip in completely registered companies; and one of the main objects of the present Bill was to do away with the inconvenience and delay which now attended the formation of a Joint-stock Company under that Act, by abolishing preliminaries which were found to have no practical value. He begged to remind the House that this was no new matter, but that the question of limited liability had been under discussion for many years. It had engaged the consideration of several Committees of the House of Commons, and in 1853 a Commission had been issued to inquire into the whole subject. That Commission was composed of men of great eminence, including lawyers and commercial men. Now their Lordships were told by the noble Lord opposite, that the Bill was founded upon principles diametrically opposed to those recommended by the Commission. He (Lord Stanley) could not allow that that was an accurate representation of the fact. That the Report was not a satisfactory one, he admitted. In fact, the Commission, as a Commission, made no report at all; but each member reported his own individual opinion, and a great quantity of valuable evidence was contained in the appendix. He ventured to say, however, after a careful perusal of the proceedings of the Commission, that those whose opinions were entitled to the greatest consideration, were in favour of the introduction of some such Bill as that now proposed; while the evidence, based upon the practice of foreign countries, clearly showed that the principle of limited liability was very generally in force, without danger, and with great advantage to the commercial intarests of those countries. In 1854, after the Commission had reported, the subject was brought before the House of Commons, and a Resolution was unanimously carried to the effect that the law of partnership ought to be altered, and that limited liability ought to be adopted. That opinion having been expressed by the other House two years ago, no one could be said to have been taken by surprise by the passing of the Bill of last Session, or by the introduction of the present one, further amending the law. He would not repeat what he had said last year as to the importance of settling this question; but he might remind their Lordships, that for more than two years the Board of Trade, which was being constantly asked to grant charters of incorporation to great commercial undertakings, had suspended its functions, and had felt that the time had come for Parliament to interfere and to pass some general Act. The Bill passed the House of Commons without a single division upon its principle; and the alterations which were made in Committee were calculated to extend rather than to narrow its provisions. That was the state of things when he brought up the measure of last year and asked the concurrence of the House to it; but at the same time he stated that it must be regarded more in the light of a provisional than of a permanent measure. He admitted that the Bill now before the House did not contain many of the restrictions and safeguards, as they were called, which were to be found in the Act of last year. [Lord OVERSTONE: Hear, hear.] The noble Lord cheered that statement; but what, he asked, was the value of those restrictions? He (Lord Stanley) contended that they operated as a mere delusion, that they were of no real value whatever, and that they only tended to prevent persons from exercising due caution as regarded the character of the promoters of public companies, and the nature of the schemes recommended to the public. In proof of this assertion, he would quote from an authority which he was sure would be received with respect by the noble Lord. Mr. M'Culloch, in his pamphlet entitled, Considerations on Partnerships with Limited Liability, referring to the Act of last year, said— And notwithstanding the laudable care that has been taken, in the compilation of the late statute, to guard against the machinations of such parties, we are well assured that the security which it endeavours to establish against fraud will be found to be of no real value. A, B, and C, may allege that they have each paid £1,000 or £10,000 to the stock of a limited liability association; but, as was formerly stated, you can have no security that such sums have been or will be paid; or, supposing them to have been paid, that they have not subsequently been withdrawn, or wasted, or lost in unprofitable speculations. …… As to official returns, oaths, declarations, and so forth, they bind those only who do not require to be bound; but whenever they become necessary they are good for nothing. Honest managers would act honestly though they did not exist; and dishonest managers easily evade them and set them at defiance. The pretended security which they afford is really worse than nothing, for it begets an undeserved confidence on the part of the public, and makes them trust to what is wholly unworthy of any trust whatever. Confirmed by that opinion, he had come to the conclusion that all those conditions and restrictions which were imposed upon companies were of little or no value—in point of fact, that they did more harm than good, and that they only tended to perpetuate and increase that fraud which they were supposed to be calculated to repress. In discussing this matter, however, it was desirable that they should go a little beyond the mere consideration of limited liability, which was only one ingredient of the question. Many persons objected to public companies altogether, because all joint-stock associations were to some extent an interference with the private trader, and the aggregation of capitals placed single individuals at a comparative disadvantage. He (Lord Stanley) contended, on the other hand, that in strict justice Parliament had no right to interfere with the application of any man's capital, and to say that he should not employ it in any way he thought fit. This Bill gave a man no privilege, but it was calculated to prevent an undue and unjust interference with him in the disposal of his capital. According to the old law, people might limit their liability with respect to individual transactions if they stated their limited liability upon every such transaction beforehand; and such was not only the law but the practice with insurance companies at the present moment. He proposed now to enable persons to do that by a general publication of the intention of the company to confine itself to a limited liability, which by law at present they could do with regard to each individual transaction. It was for those who objected to limited liability to justify the invasion of every man's natural right to employ his capital as he might think fit. He did not think he need say more on the general subject. In the first place, the Joint-stock Companies' Act, the Act amending the same, the Winding-up Act, and the Limited Liability Act of last Session, were repealed with the view of being consolidated into a regular code for the government of joint-stock companies, whether limited or unlimited. In the next place, banking and insurance companies were excepted from the operation of the Bill. The business transacted by banking companies was of a peculiar nature, and required to be regulated by a law of its own; while insurance companies, although it might be right to deal with them upon a future occasion, and although practically they were conducted upon the principle of limited liability, had been omitted in accordance with the recommendation of the Committee of the House of Commons which sat two years ago. In the third place, the Bill proposed that all companies consisting of more than twenty persons should of necessity come under the operations of the Act, and that all companies consisting of between seven and twenty persons might avail themselves of its provisions or not, as they pleased. When seven persons or more desired to form a company, the Bill required them to make a memorandum of association, stating the object of the company, the amount of the shares, the amount of the capital, and whether the company was to be limited or unlimited. They were then required to prepare for themselves articles of association—a form of which was appended to the Bill, to be used or not, as parties pleased—but if the company was formed with limited liability, the fullest publicity was to be given to that fact, that all persons dealing with them might know the conditions upon which they traded;—and when these articles had been executed, and a registry established, they were entitled to complete registration, and became a fully formed company, authorised to exercise all the functions of a partnership. Great complaints had been made against the system of registration under the Joint-stock Companies' Act. It was therefore proposed under the present Bill to require all companies to establish registers, to be kept at their own offices, open to inspection at all reasonable hours. Registration was to be evidence of liability. By another provision of the Bill, which he thought would operate beneficially by preventing improper management, power was given to one-fifth of the shareholders of any company to apply to the Board of Trade for the appointment of an inspector, whose duty it should be to inquire into the affairs of the company, at the expense of the applicants, and make a report thereon, such report to be the property of the parties so applying. The provisions for the winding up of companies were very important, and he believed would remove many of the difficulties which had been experienced under the existing Act. Companies would, under the new law, be instantly wound up whenever they became insolvent and unable to pay their debts. The principal conditions for the winding up of a company were—failure to commence its operations within a year after its formation, suspension of its business for a whole year, expenditure of three- fourths of its capital, and neglect or inability to pay its debts within three weeks after demand. In such cases the members might petition the Court, which would immediately proceed to wind up the affairs of the company. Such were the more important provisions of the Bill, and if their Lordships admitted the principle of limited liability—which he maintained they had done—they were bound to allow it to be tried in its integrity. He was satisfied that if they did so the event would not justify the apprehensions which were at present entertained in some quarters. That we should continue to have periods of excitement and over-speculation, though, perhaps, not to the same extent as before, he did not doubt; but that excitement and over speculation would not be fostered or encouraged by limited liability, which, on the contrary, would have a less injurious effect than the existing system of unlimited liability. If a scheming body of directors wished to form a company for fraudulent purposes, they would prefer a company composed of men unlimitedly liable, rather than one conducted on the principle of limited liability, because they could not avail themselves of the funds of the latter to the same extent; while from the fact of its being supposed that limited liability gave less security to the public, every one who dealt with such a company would feel it necessary to inform himself of its real character; the effect of which would be that, instead of those wild and extravagant schemes which had been so rife under the existing system, there would be much greater caution in the establishment of trading concerns, as well as greater circumspection in those who transacted business with them. The principle of the Bill was to allow every man to employ his capital as he pleased, but at the same time to require that the public should be fully informed as to the nature of the partnerships into which he entered, and the terms upon which they conducted their business. The provisions of the Bill had been framed with the view of carrying out that object, and he believed that, while permitting the ut-utmost freedom to capital, they would afford sufficient security to the public without imposing any of those so-called restrictions which experience had proved to be worthless.

Moved, That the Bill be now read 2a.


said, that he could not allow the Bill to be read a second time without addressing a few observations to the House. He was glad that their Lordships had not heard tonight a repetition of that most absurd and senseless of all fallacies—a fallacy which he had observed was not entirely out of fashion in another place—that the principle of free trade was involved in the present Bill. The noble Lord had alluded to exceptional cases in which the law now recognised limited liability; that proved but little on behalf of this Bill, for nobody denied that there were some enterprises which required the application of that principle;—no doubt we could not have had our canals and railroads and other great works completed except through the principle of limited liability,—no one ventured to deny that in such enterprises the principle of limited liability was rightly adopted; but that admission afforded no argument in support of the principle of this measure. The present was the third of a series of measures on the same subject which had been brought forward by the Government, all differing from each other; but this Bill realised to an incalculably greater degree than either of its predecessors all the evils he (Lord Monteagle) so much dreaded from them, without giving the protection which the other Bills afforded. His noble Friend said that the opponents of the Bill had been wrong on the former occasions in advocating that protection; but, even if that were so, what security had the House that they were right now in abandoning all precautionary measures whatsoever? The noble Lord said this Bill was especially for the benefit of small capitalists and traders. On the contrary, he (Lord Monteagle) believed that there was no class of the community likely to suffer so much from a Bill of this description as the humbler classes, who would be the most readily induced to invest their savings in speculations over which they would have no means of control, and who would thus be made the dupes of designing parties. Under this Bill any number of persons not less than seven, with a paid-up capital not exceeding 1s. a share, might establish a company to undertake any trade except that of a banking or insurance company. He might be permitted to doubt whether such a proprietary was likely to furnish instruments capable of conducting industrial pursuits, but however this might be, of one thing he was sure, that whilst such companies might be unsuited for ordinary trade and manufactures, there was one enterprise they would be well fitted for, and that was the manufacture of shares and the establishment of a spirit of gambling. He was told that their Lordships were not bound to protect people against imprudence by Act of Parliament, but that was not an accurate mode of stating the case. He would rather argue, as against the present Bill, that their Lordships were bound not to ruin people by Act of Parliament. He apprehended serious mischief from the Bill on the table, and therefore he entreated their Lordships to hesitate before they gave sanction to a measure that, so far from being required for the legitimate trade of the country, could not fail to be detrimental to those engaged in it. They had had experience enough in England of the great suffering and inconvenience produced by the establishment of joint-stock companies, even when the application of limited liability was legitimate and necessary; they all knew the amount of misery and ruin, and he might add, the disgrace and crime, which, the railway mania had produced. The manner in which all classes, even the highest, had engaged in the traffic in shares had been most disgraceful; but how much more would this be the case under such a Bill as the present, when gambling shops would be established at the corner of every street, and enterprises carried on for the benefit only of the small fraternity who organised them, and prosecuted so long only as suited their fraudulent purposes, leaving their dupes without a remedy? His noble Friend the President of the Board of Trade had not attempted a reply to the impressive speech of his noble Friend near him (Lord Overstone); nor had the noble Lord ventured to refer to the Report of the Royal Commission to seek arguments in support of his Bill. Indeed, with regard to that Commission it was of importance to remember, that it had given no sanction to such a Bill as the present, and that the most influential and experienced mercantile members connected with the inquiry were entirely opposed to such enactments. The noble Lord had referred to the example of foreign States; but he (Lord Monteagle) thought foreign countries were much more likely to benefit by the experience and practice of England than we were in adopting the system of commandite and limited liability. But he (Lord Monteagle) denied that on the present occasion we were adhering to foreign experience, if it were t admitted to be a safe guide. His noble Friend had indeed stated that the principle of this measure was recognised in almost every foreign country, but he (Lord Monteagle) challenged the noble Lord to men- tion any country in which it was adopted. Had such a legislative monster as the Bill now before their Lordships ever been produced in America, in France, or in any other part of the world? Wherever in foreign countries limited liability had been established, the principle had been coupled with safeguards and limitations, all of which were wanting in this Bill. They had been told that they ought not to attempt to regulate private interests by Act of Parliament, but should leave people to take care of themselves; but that was no reason why they should encourage a host of adventurers with shilling shares and five pound capitals to start such useless and mischievous companies, to the injury of their neighbours. He asked the House to consider the unfair and partial consequences this measure—upon which his noble Friend relied for the development of trade and commerce in this country—would entail upon persons who in employing their own capital had to encounter the risks of ordinary trade. Mushroom companies in competition with them would be established under the auspices of plausible secretaries and of gentlemen learned in the law; and he feared the term "limited liability," instead of being regarded as a warning and an indication of danger, would rather operate as a bait. And even if there was no fraudulent intent, the whole of the small capital of one of these undertakings, not being carried on upon true mercantile principles, would be wasted in extravagant competition with the legitimate trade. After the conclusive opinions which had been expressed by the noble Lord (Lord Overstone) in presenting a petition to-night, and also in a previous debate, supported as those opinions were by his great ability and experience, he (Lord Monteagle) was unwilling to occupy their Lordships' attention further upon this subject; but he must say that if any indifference existed in the public mind with reference to this question, it arose partly from the great pains which had been taken to argue the case in such a manner as to lead the middle and humbler classes to believe that the measure would extend to them advantages which had hitherto been confined to the wealthy. He would feel it his duty, even if he should stand alone, to say "Not content" to the second reading of the Bill.


said, that he could not allow some observations of his noble Friend to pass without reply, although there was no intention of taking a division on the Bill. His noble Friend had congratulated the House on the circumstance that the Government had entirely abandoned what he considered the absurd argument that this measure had any connection with the abstract principles of free trade. But the Government had not done so. He (the Duke of Argyll) must, for himself, repeat the opinion he had before expressed, that there was a very close and intimate connection between the principles upon which this measure was founded and the principles of free trade. He conceived the doctrine of free trade to be, not merely that they ought not by any artificial restriction of law to prevent men from obtaining from abroad such commodities as they required, but that, as a general principle, it was unwise to prevent individuals from investing their property in what they deemed the most profitable manner. The principle of limited liability was objected to; first, because unlimited liability was necessary for the security of creditors; secondly, because it was requisite for the security of individual traders, who would be exposed to undue competition from companies established under a system of limited liability; and lastly, on the ground that the adoption of the principle of limited liability would give an undue stimulus to speculation. But the Bill would not deprive creditors of their security; for under the present law each individual or company could bargain with his or its creditors as to the extent to which his property should be liable. That principle was admitted even by those who were opposed to limited liability; and yet those who admitted it wished to throw all kinds of impediments in the way of a legal application of it. However, he would submit to noble Lords who agreed to that principle, that, with regard to the present Bill, all they had to do was to assent to the second reading, and then in Committee to see that proper securities for publicity and full knowledge to creditors of the terms upon which they were to deal were provided in the Bill. It had been admitted on all hands, including the noble Baron (Lord Overstone) himself, that any attempt to substitute legislative protection for individual prudence must necessarily fail. Then, again, as the usury laws had been repealed, and the creditor had been permitted to make his own terms with the person with whom he dealt, it was no longer necessary to retain the obstructions of the present state of the law; but, on the con- trary, Parliament was bound, in consideration of the shareholders, to remove all those impediments. A creditor was now permitted to measure the rate of interest he charged by the extent of risk which he imagined he was about to run, and, consequently, could protect himself in his dealings with individuals or companies, by exacting thirty or forty per cent, and after he had drained away all the profits by his exorbitant interest, he could still claim his capital like any other creditor. Then, with respect to the remarks which had been made as to the protection at present afforded to certain trades carried on by individuals, the meaning of that doctrine was simply "protection." It was admitted that in certain trades or businesses limited liability could be usefully granted, and it was said that in such cases the Board of Trade had power to grant charters to effect that object; but it must be remembered that in granting those charters, no consideration was given to the probabilities of success, or to the security which would be afforded to the creditors or the shareholders. With respect to the most important argument which had been urged against the Bill—that it would give an unnatural and unhealthy stimulus to speculation, he (the Duke of Argyll) could not believe that any apprehension need be entertained upon that head. If the State were able to distinguish between good and bad speculations, it would be the duty of the State to encourage the one and discourage the other; but it was admitted by all persons that the State could not attempt to exercise such power with advantage to the public. At the same time that the opponents of limited liability admitted the impossibility of discrimination on the part of the State between good and bad speculations, they called upon the State to offer a general discouragement to all speculations alike, whether good or bad. Such a course would not be advisable upon any principle, and in order to remove that evil the present legislation was required. It could not he denied that, in the present state of the law, all speculations, whether good or bad, were alike impeded, as was admitted even by those who were opposed to the present measure. His noble Friend said that every man who entered upon a speculation should be held liable to the whole extent of his means; but he (the Duke of Argyll) held that every man should be held bound to the full extent to which he bargained to be bound, but not beyond. There were de- grees of confidence with regard to the remunerating character of mercantile undertakings, and, if a man entertained sufficient confidence in a concern to risk £1,000 in it, why should you prevent him from embarking in it at all unless he risked his whole fortune? If every man were to be held liable to the whole extent of his fortune, why not go further, and say to the extent of his life? [Lord OVERSTONE: Oh, oh!] His noble Friend cried "Oh!" but he would remind the noble Lord that there were times when the matter would have gone to that extent; and by the Bubble Act persons were subjected to the penalty of a prœmunire. It was said that the legislation now proposed would lead to rash and dangerous speculation. Now, had the present law secured caution on the part of the public? The manias of 1825, 1834, and 1845 had been alluded to. Well, all these manias had happened under the existing law, and no proof had been given to show that such manias would now be increased. On the contrary, it appeared to him that there were several modes in which the proposed change in the law might operate favourably in preventing rash speculation. He did not believe that any law would entirely prevent these periodical manias; but was it not possible that the change now proposed might induce greater caution on the part of the public? The Committee which sat to investigate this subject spoke of the evils at present created by the use of the names of persons of great wealth and reputation in the formation of public companies. At present, if a man saw the name, for example, of his noble Friend in the prospectus of a new company, he would say, "Lord Overstone is a man of great wealth and prudence; he is liable to the full extent of every farthing he possesses; he must therefore have inquired fully into the probable success of this undertaking, and I can have no hesitation in joining the company too." But, under the law of limited liability, a man would say, "Lord Overstone is a man of great wealth; it is very well for him to play at ducks and drakes with his money, and to risk £2,000 or £3,000; but the loss of such a sum would ruin me; I must be more cautious," Another cause of the speculative mania was the facility with which money could be obtained on loan; and it seemed to him to be an advantageous change if people were induced to invest their surplus capital in taking shares instead of being forced to lend it from the want of a law of limited liability. He had heard various warnings given as to the danger of trusting too much to abstract principles in a complex state of society. Now, this was almost precisely the language which they had always heard used when changes in the law which had turned out of the utmost benefit to society had been opposed by unreasoning prejudice. He felt confident that this objection would be equally unfounded in the present case, and that, by carrying out practically the abstract principle that a man had a right to invest his money on what terms he pleased, their Lordships would be adopting a system which would neither weaken our credit nor encourage rash speculation, but which would be recognised as a great boon by the country generally.


said, that he thought the restrictions introduced into the first Bill brought forward by Her Majesty's Government, by a noble Earl who had come from near the German Ocean to be present at its discussion, were highly salutary. He could refer to a case in 1827—in which a noble Lord, now high in the councils of his Sovereign, had suffered by joining the Devon and Cornwall Mining Company; and he did not think it useless to take precautions to prevent less sagacious persons from being deceived, and wished that a clause could be introduced to show the actual price given for the patent or other object of any speculation to the founder of the company. He thought the present Bill contained useful clauses in simplifying registration and facilitating the winding up of companies, and therefore would vote for the second reading; but if those in whose judgment he had confidence, and who had proposed restrictions before, should again bring them forward, he should feel bound to support them.


said, that in the present state of the House he would not trouble their Lordships with a lengthened argument, but hoped to convince them of the inexpedience of the measure upon a future occasion. At all events, he recorded his protest against it.


asked whether it was a reasonable course upon a Bill consisting of 116 clauses, among which were provisions of the greatest importance, not merely to traders under limited liability, but to those under unlimited liability, to oppose the second reading because objections were enter- tained to one portion of the measure only? The proper course, he thought, would be to allow it to go into Committee, and to oppose in Committee the clauses which were considered to be injurious in their bearing.


replied, that it was quite a new doctrine that they should not record their votes against the principle of a measure, because that principle was only embodied in some of the clauses.

On Question, their Lordships divided:—Content 18; Not Content 5: Majority 13.

Resolved in the Affirmative; Bill read 2a accordingly, and committed to a Committee of the Whole House To-morrow.

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