JOINT-STOCK COMPANIES BILL. (Hansard, 24 June 1856)

LORD CAMPBELL
said, he did not mean to offer any Amendment on this Bill, although, as to the Limited Liability Bill, he confessed he had his misgivings as to the adoption of that principle. He did not, however, agree in all the objections urged against the measure by his noble Friend 1891 behind him (Lord Overstone); nor was he, on the other hand, so sanguine as to suppose that this measure would give rise to a new California. He was disposed to think that the anticipations of those who supported the Bill would be disappointed. He hoped that not serious mischief would arise from it, but he certainly did not expect any considerable benefit from it.

§ LORD OVERSTONE
repeated his leading objections to these measures of the Government, but was almost inaudible. He said, that he thought the Government had incurred a serious responsibility in thus disturbing the relations that had hitherto existed between debtor and creditor; and, commenting on the exception of banking and insurance companies from the operation of the Bill, asked the noble Lord the President of the Board of Trade how he understood this Bill proposed to deal with companies associated together for these purposes? The Government, by this measure, were about to draw what he believed to be an unjust distinction between banking and the general commercial transactions of the country. He was desirous of knowing what class of companies was to be endowed with the privileges of limited liability, and what class of companies was to be exempted from the advantages of the new system?

§ LORD STANLEY Of ALDERLEY
said, he was prepared to admit that the exemption of banking and assurance companies was somewhat opposed to the principle of the Bill. But those companies were excepted from the Joint-stock Companies' Act; and, although this Bill proposed to amend that Act, it was not proposed to make any alteration in this particular. He thought that there were many reasons why banking companies should be excepted, for they were subject to peculiar regulations. Up to this moment no difficulty had been experienced by the absence of a definition as to what constituted a banking company, and he saw no reason to apprehend why greater difficulty should now he experienced in courts of law in making this definition.

§ LORD MONTEAGLE
said, the real question was this, whether there was any practical difference introduced in the relative position of banking companies in the present Bill from the previous state of the law? If there were such difference, it furnished an additional motive for caution on this subject. At the present moment there was an advertisement in the public papers, setting forth the operations of a 1892 future company with the view of claiming the advantages of the law of limited liability, and to all intents and purposes those were banking operations.

THE LORD CHANCELLOR
said, any objection of the kind came inappropriately from the noble Lord, because he had succeeded, in the present Session, in carrying a Bill legalising the practice of crossed cheques. It was very well known that the law, as it at present stood, would not permit more than six persons to establish a banking concern, except they were incorporated. As to the definition of a banking company, there was always a difficulty in making definitions when you came to the extreme line; and if they were to wait for a clear definition before they legislated, they would soon come to a dead lock.

THE DUKE OF ARGYLL,
referring to an observation of Lord Overstone, on his (the Duke of Argyll's) speech on a previous discussion of this Bill, denied that the arguments he had then advanced had been brought forward in a spirit of levity. Those arguments were, he contended, strictly logical, and he was ready to repeat them. The noble Lord had frequently admitted that there was no reason whatever why an individual should not bargain as to the degree of liability which he would incur in any matter of business; and the whole question now was, whether you should enable persons to make that bargain more easily than they did before. On the other hand, however, the noble Lord declared that persons should be liable "to the utmost extent" for all their liabilities. Now, he (the Duke of Argyll) admitted that persons must be responsible to the extent to which they bargained to be responsible; but beyond that he did not think the Government had any right to bind them.

§ LORD OVERSTONE
(who was almost inaudible) again protested against the course adopted by the Government; and urged that it was not right that the Legislature should refuse to impose any safeguards upon Joint-stock Companies, but leave every man to the exercise of his own discretion. The noble Lord having read Lord Ashburton's description of the panic of 1825, contended that similar results might be anticipated if the House persisted in sanctioning this measure; and warned their Lordships that when the crisis arrived—as it might do even in a more exaggerated form than then—it was not the imprudent, the rash, and the foolish only who would 1893 suffer; but that the innocent, and even the careful would be necessarily drawn into a vortex from which they could not escape.

§ LORD STANLEY OF ALDERLEY
said, that the account which the noble Lord had read of the occurrences of 1825 was truly descriptive of the evils of excessive speculation; but he begged to remind their Lordships that all those evils existed under the present law; and it proved that the paternal system of legislation which the noble Lord recommended was not the wisest that could be adopted; but that, instead of treating the whole public as children who could not take care of themselves, it was better to leave these matters to the judgment of the public, who would then act like grown-up, sensible men, and would not be deluded by the false security supposed to be imposed by a number of fallacious restrictions which did no good, but, as he believed, encouraged and created the frauds which they were supposed to prevent. The principle of limited liability was no new one; it had been conceded already by three successive Parliaments, and he called upon their Lordships now to make the proposed attempt, and not to be deterred by descriptions of results which had accrued from rash and desperate speculation.