duced uniformity of principle and practice on several points of mercantile law. But, what was still more important, a tendency was given to uniformity of legislation, which has ever since been maintained to the manifest advantage of the commercial community all over the world. In 1873, the Association for the Reform and Codification of the Law of Nations was established, and its labours have been directed to many branches of commercial law in which a conflict of law now exists. The law on Bills of Exchange, General Average, Shipping, Patents, Copyrights, and Foreign Judgments have been submitted to a searching inquiry, and important results may be anticipated. The time is speedily drawing near when the original design of a uniform code of commercial law for all civilised States may be fully realised. In the words of Mr. Justice Story: What a magnificent spectacle will it be to witness the establishment of such a beautiful system of juridical ethics, to realise not the oppressive schemes of "holy alliances" in a general conspiracy against the rights of mankind, but the universal empire of juridical reason, mingling with the concerns of commerce throughout the world, and imparting its beneficial light to the dark regions of the poles and the soft and luxurious climates of the tropics. Then indeed would be realised the splendid visions of Cicero, dreaming over the majestic fragments of his perfect republic, and Hooker's personification of the law would stand forth as embodied truth, for "all things in heaven and earth would do her homage, the very least as feeling her care, and the greatest as not exempted from her power."

CHAPTER XI.

PARTNERSHIPS AND JOINT-STOCK COMPANIES.

Investments of the Middle and Working Classes.-The Law of Partnership. -Limitation of Liability.-Objections to Limited Liability.-The Limited Liability Acts.

FOR trading and public enterprise, especially of a permanent character, the association of capital and labour, and the accumulation of small investments into great reservoirs, are absolutely necessary. Those gigantic undertakings which have been conceived and perfected with so much skill, and which have exercised so powerful an influence in promoting progress and civilisation, have mostly all been ushered into existence by the agency of public companies. At first the business pursued in distant countries was carried on by private adventurers, each risking his own property, and each trading separately. They formed companies, and obtained charters of incorporation with monopolies and privileges, but they had no joint stock. Their union was suggested rather by their want of strength to militate against the difficulties of new and perilous adventures, than by any wish to accumulate the subscriptions of many into one common fund. It was after such companies ceased to have for their scope the mutual defence of the adventurers that they began to be established for the purpose of combining large and small sums of capital for undertakings of a permanent character. And it was for the purpose of allowing persons to embark in or withdraw their funds from a concern, that the practice was introduced of the issue and transfer of shares. Unfortunately, such transfer was soon found to be open to great abuse. The transfer of shares became itself a trade, and companies were formed seemingly for the sole purpose of creating shares upon which speculative transactions might be carried on. The possible results of an undertaking were in many cases but a secondary consideration; care was taken to get up the prices of shares to an exorbitant height, and then they were thrown on the market, leaving the unfortunate last purchasers to bear heavy losses. This kind of

Of that character was the East India Company, the South Sea Company, the African, the Levant, and other commercial companies.

dealing was carried on for a considerable time, but it reached its elimax with the South Sea bubble. And then a stop was put to it by the Legislature, by the passing of an Act rendering illegal and void the acting or presuming to act as a corporate body, the raising or pretending to raise transferable stock, and the transferring or pretending to transfer or assign shares in such stock without legal authority. In other words, no company was thenceforth allowed to be formed with the ordinary powers or rights of acting in a corporate or semi-corporate capacity except by royal charter. legislation, however, having the effect of placing an obstacle to the formation of trading companies, it became injurious to commerce, and proved a bar to the investment of unemployed capital; so that after having remained a dead letter in the statute book for a long time, the Act had to be repealed.3 Yet, practically, considerable hindrance continued to be interposed to the formation of companies, from the fact that no Act existed allowing any number of persons to act in a corporate capacity and to sue and be sued by an officer of the company. How could a company composed of some hundreds of persons exercise its rights if in every case the names of all the shareholders had to be used? To prevent this evil, no other means existed but to get an Act of Parliament. This method of course was troublesome and expensive, and it then became necessary to pass an act 5 enabling the Crown by letters patent to grant to any trading company any of the privileges of suing and being sued in the name of an officer upon such terms and conditions as his Majesty should think fit. But this statute did not remove the evil. It only mitigated it by throwing on the Crown the responsibility of according the rights and privileges to whomsoever it pleased.

The concession of the right of trading with limited liability, also connected with the granting of a charter, was particularly difficult and invidious. The circumstances which the Treasury esteemed sufficient justification for granting letters patent with such privilege were the following:-1. Where the object for which the association is formed is one of a hazardous character, in which many individuals may be disposed to risk moderate sums, the aggregate of which may constitute a large sum sufficient for the undertaking, but in which a single capitalist, or two or three under an ordinary partnership, would be unable or unwilling to engage. The working of mines was an example of this species of adventure. 2. Where the capital required is of so large an amount that no single partnership could be expected to supply it, as in the case of railways, canals, docks, and works of that description.

26 Geo. I. c. 18.

3 6 Geo. IV. c. 91.

3.

The expense for obtaining a charter was great. The fees paid to the Privy Council and to the Council of the Board of Trade in an ordinary case was 4027. Os. 4d.; and in a banking case, 9551. 3s. 2d.

4 & 5 Wm. IV. c. 94.

Where no great advance of capital, but extended responsibility, is desirable, as in the case of assurance companies; and 4. Where the object sought can only be effected by a numerous association of individuals, such as the formation of literary societies, charitable institutions, and similar bodies. In 1837 the President of the Board of Trade instructed Mr. Bellenden Ker to inquire into the state of the law of partnership, more especially as regards the difficulties which existed in suing and being sued when partners are numerous, and to consider whether it would be expedient to introduce a law authorising persons to become partners in trade with a limited responsibility similar to the French law of partnership en commandite. But the report was unfavourable to such an innovation. Mr. Ker himself deemed it inexpedient to adopt such a system, and among those whose opinions were quoted, Mr. Samuel Jones Loyd, Mr. Thomas Tooke, Mr. Larpent, Mr. Horsley Palmer, Mr. Kirkman Finlay, and Mr. John Gladstone pronounced themselves decidedly against limited liability; whilst Lord Ashburton, Mr. G. W. Norman, and the Hon. Francis Baring expressed an opinion in its favour.

Thus matters continued till 1844, when the necessity of introducing some check to the frauds and equivocations practised in connection with joint-stock companies appeared to require some effective remedy. On February 16 of that year, a Committee of the House of Commons was appointed to inquire into the state of the law respecting joint-stock companies other than banking, with a view to the greater security of the public, and the evidence brought before them was of a startling character. There were companies in existence faulty in their nature, inasmuch as they were founded on unsound calculations, and which could not by any possibility succeed. There were companies so ill constituted that miscarriages or failures incident to mismanagement would be sure to attend them; and there were companies both faulty and fraudulent in their object, being started for no other purpose than to create shares for the purpose of jobbing in them, or to create, under the pretence of carrying on a legitimate business, the opportunity and means of raising funds to be shared by the adventurers who started the company. These companies adopted, as far as possible, the outward characteristics common to those of the best kind; exhibited an array of directors and officers; announced a large capital; adopted the style and title of a company; issued plausible statements intimating excellent purposes; used some conspicuous place of business in a respectable situation; and employed throughout the country respectable agents and bankers; but many of these characteristics were fictitious. The directors had either not sanctioned the use of their names, or they were not the persons they were supposed to be. In many cases there was neither capital, subscribers, or deed of settlement. The style of the

company might be unobjectionable, because any company might adopt any style; but its purposes, though plausible, were often founded on calculations which did not admit of success, and it ought not only not to have received the sanction or authority of Parliament or of the Crown, but the very statutes which were cited as conferring its authority might be found to have a very different object. Such being the state of the law on joint-stock companies, and such the defects in many of those in existence, the committee recommended a plan of registration of such companies; and thereupon the Act was passed which provided for such registration, and gave power to all registered companies to sue and be sued in the name of their officers.6 The Act applied to every joint-stock company formed for any commercial purpose, or for any purpose of profit, or for the purpose of assurance; but it excepted banking companies, for which a special Act was passed, prescribing similar conditions as to registration, but adding that the capital of the company should in no case be less than 100,000l. and the shares 100l. each. Here we have another instance of over legislation. Can registration be a sufficient guarantee against fraud? Allowing that it is an evidence for the time being of the existence of a compact between a certain number of persons, what security does it afford that the terms of such compact are not rescinded the moment after? or that the capital promised is either not brought in or withdrawn? or that the registered shareholders do not transfer their shares ? moreover, unless the registrar be invested with a judicial character and with authority to investigate the accuracy of the matters registered, what certainty does it afford of the reliable character of the particulars registered? Valuable as registration is, it can never

7

6 7 & 8 Vict. c. 110.

7 7 & 8 Vict. c. 113.

And,

Under the act of 1844, from 1844 to 1855, there were registered 4,049 companies, of which 3,084 were abandoned and 965 completely registered, the proportion that remained or carried into effect being only 23.71 per cent. They were classified as follows:

In 1845, the year of the railway mania, 1,149 railway companies were pro visionally registered and only 4 completely registered.