be relied upon as a sufficient security against fraud, and there is always danger lest the semi-official character given by it to a company may have the effect of creating a spirit of confidence where none should exist.

In a few years the partnership law became once more the subject of public attention. With the commencement of the second half of the present century a conviction gained ground that, with the growing wealth, those who occupy a middle station in society were progressively increasing in number and in the proportion which they bore relatively to the population of the kingdom. There was a large increase in the number of depositors and amount of deposits in the savings banks; there was a considerable addition to the number of persons receiving under five pounds at each payment of dividends of the public debt. There was a much larger income between 150l. and 500l. assessed to income tax. But there was a decided want of increasing facilities for the safe investments for the savings of the middle and working classes. A Committee of the House of Commons was therefore moved for on the subject, in 1850, by Mr. Slaney, which made a useful report. The committee found that investments in land or landed securities were much desired by the middle and working classes, but that the uncertainty and complexity of titles, and the length and expense of conveyances, together with the cost of stamps, placed this species of investments, generally, beyond the reach of those parties; and that mortgages on land were liable to the same sort of difficulties, and often proved insecure investments. They found that the Crown was empowered by Act of Parliament in certain cases, by charter, to limit the liability of partners, but that this power was seldom exercised, did not seem guided by any clear rule, and involved expense greater even than that of obtaining an Act of Parliament.

Another subject of complaint dealt with by the report of Mr. Slaney's committee, though generally, was the law of partnership, which placed obstacles in the way of any body of workmen who desired to combine their money and labour in industrial undertakings. In some cases several industrious men worked together under regulations of their own, with a small capital. They were directed by managers whom they chose, the goods produced were sold for their common benefit, and the profits were divided among the contributors of capital and labour in certain proportions agreed on. But the law afforded no effectual remedy against the fraud of any one dishonest contributor or partner, and no summary mode of enforcing the rules agreed to for mutual government. The committee expressed their strong opinion of the pressing necessity of the subject being attended to by the Legislature. The rapid increase in population, and in wealth of the middle and industrious classes within the last half century, rendered this of

great consequence. The great change in the social position of multitudes, from the growth of large towns and crowded districts, rendered it more necessary that corresponding reforms in the law should take place, both to improve their condition and contentment, and to give additional facilities to investments of the capital which their industry and enterprise were constantly creating and augmenting. And it was the conviction of that committee that if such measures were carried into effect, a stimulus would be given to the industry of the country, likely to cause additional employment and contentment, without injury to any class, and with added security to the welfare of all.

Following this, Mr. Slaney, in the following session, in 1851, obtained another Committee of the House of Commons especially to consider the law of partnership and the expediency of facilitating the limitation of liability with a view to encourage useful enterprise and the additional employment of labour. The committee consisted of some eminent members, and examined witnesses of great authority, and the result of their labour was a recommendation that greater facilities should exist in granting charters, under rules published and enforced by the proper authorities, and that an easier mode of borrowing additional capital should be allowed, without risk, to the lender, beyond the amount of the sum advanced. The committee corroborated the general impression of great increase of personal property of late years. The population returns showed an increase of the population of almost all our largest towns, chiefly inhabited by persons dependent on personal property, at the rate of nearly 30 per cent. in every decennial period since the beginning of the century, whilst the rural inhabitants had augmented only at about one-third the same proportion. It appeared further, that in thirty-three years since the peace, whilst lands in Great Britain had increased in value to the extent of only 8,576,000l., viz., from 39,405,000l. in 1814–15 to 47,981,000l. in 1848, or a little more than five per cent., messuages, chiefly houses and manufactures and warehouses in and near towns, and inhabited by persons depending greatly on trade and commerce, had augmented above 26,000,000l. (from 16,259,000/ in 1815-16 to 42,314,000l. in 1845) in annual value, or about 130 per cent. in the same period; whilst the value of railways, gas works, and other property, chiefly held in shares as personal property, had increased above twelvefold in the same period. The same result, showing the increase of personal property since the peace, was evident from the fact that the legacy duty was derived from a capital of 24,000,000l. in 1816 and 45,000,000l. in 1845. The course of modern legislation had been gradually to remove restrictions on the power which everyone has in the disposal of his property, and to remove those fetters on commercial freedom which long prevailed in this country. The usury laws and various

laws against combinations had been modified or repealed. General acts to facilitate the formation of joint-stock associations and building societies had been passed. The committee therefore thought it proper to offer suggestions of a like nature in reference to the laws of partnership, and especially as regards the unlimited liability of partners as it existed in this country. And they recommended the appointment of a commission of adequate legal and commercial knowledge to consider and prepare a consolidation of the existing laws, and also to suggest such changes in the law as the altered condition of the country might require, especial attention being paid to the establishment of improved tribunals to decide claims by and against partners in all partnership disputes, and also to the important and much controverted question of limited and unlimited liability of partners.

A royal commission having been appointed in 1852 to inquire into the state of the mercantile law of Great Britain and Ireland, it was committed to them in 1853 to inquire whether any or what alterations and amendments should be made in the law of partnership as regards the question of the limited or unlimited responsibility of partners. But in 1854 the Commissioners reported, by a majority of five to three, against any change in that direction. Their report, embodying the reasons urged in opposition, deserves to be referred to at some length. In the opinion of the Commissioners, the first question of paramount importance was, whether the proposed alteration of the law would operate beneficially on the general trading interests of the country, and they arrived at the conclusion that it would not. They were not able to discover any evidence of the want of a sufficient amount of capital for the requirements of trade. The annually increasing wealth of the country, and the difficulty of finding profitable investments for it, seemed to them a sufficient guarantee that an adequate amount would always be devoted to any mercantile enterprise that held out a reasonable prospect of gain without any forced action upon capital to determine it in that direction; while any such forced action would have a great tendency to induce men to embark in speculative adventures to an extent that would be dangerous to the interests of the general commerce of the country. The Commissioners found no reason to suppose that the reputation of the British merchants, either at home or abroad, would be raised by the establishment of firms trading with limited liability, but the contrary. They thought that the benefit supposed to accrue to men of probity and talent, by enabling them to obtain capital and establish themselves in business by the aid of partners, incurring limited liability only, was greatly overrated. Doubtless many useful enterprises calculated to produce benefit to the public and profit to those who engage in them are of such magnitude that no private partnership can be expected to provide

the funds necessary to carry them into effect, or to have the means of superintending or managing them, of which docks, railways, and extensive shipping companies might be taken as examples. And there were others of a more limited character, from which benefit to the humbler classes of society might be expected to accrue, such as baths and washhouses, lodging-houses and reading-rooms, to the establishment of which by large capitalists there was little inducement. These two classes of undertakings it might be desirable to encourage by limiting the liability of those who embark in them. But with regard to both, the Commissioners thought they should be subjected to some previous inquiry as to the means of carrying them into effect, and the prospect of benefit to the promoters and the public. With regard to those undertakings, the execution of which involved an interference with the rights of property, the sanction of Parliament always had been and still ought to be required; with regard to others, the privilege of having a limited liability might be granted by charter; and for the purpose of regulating the granting of charters, the Commissioners recommended that a board should be established to decide upon all applications for them, that board requiring in all cases compliance with certain fixed regulations. Into the views of the minority it is needless to enter. It is sufficient to state that Mr. James Anderson, Q.C., Mr. (afterwards Baron) Bramwell, and Mr. Kirkman Daniel Hodgson dissented from the report, grounding their dissent on the following reasons: 1st. The general principle of the advisability of allowing perfect freedom in the making of contracts between man and man, only guarding against wilful deception; 2nd. The experience of other countries; 3rd. The deficiencies of the present system in providing by loans for such purposes as this change of law would effect; 4th. The little chance of such a change encouraging and increasing the abuse of credits, its tendency being rather the reverse; 5th. The inconvenience that existed from our law being different from that of all other commercial countries; and 6th. A strong conviction that the benefits of the measure proposed were great and manifold, while the objections urged against it were not warranted by experience, and in great part imaginary.

In the same year, when this report was presented, Mr. (now Sir) Robert P. Collier moved a resolution in the House of Commons, That the law of partnership, which renders every person who, though not an ostensible partner, shares the profits of a trading concern, liable to the whole of its debts, is unsatisfactory, and should be so far modified as to permit persons to contribute to the capital of such concerns on terms of sharing their profits without incurring liability beyond a limited amount.' The resolution, seconded by Viscount Goderich, was well supported by the House, and at the end of the discussion Mr. Collier withdrew it, on the

understanding that the subject would receive the serious consideration of her Majesty's Government.

9

Accordingly, in 1855, two bills were introduced by Mr. Fitzroy, Mr. Bouverie, and Viscount Palmerston; one for limiting the liability of members of certain joint-stock companies, and the other to amend the law of partnership, to the effect that a person lending money to a partnership on condition of receiving a portion of profits, varying with the amount of the same, should not thereby be considered a partner. The first of these bills passed into law; the second was withdrawn, but from that year the principle was admitted, and the acts passed in 1856,10 1857, 1858,12 gradually removed the exceptions originally made affecting insurance and banking. Finally, in 1862,13 a new Act for the regulation of companies was passed, by which any seven or more persons associated for any lawful purpose, by subscribing a memorandum of association, might constitute themselves a company with limited or unlimited liability; and also an Act to regulate the formation of industrial societies.14 To the former, which is now the principal Act, we must add the Act of 1867,15 with provisions allowing limited companies to be formed with directors having an unlimited liability, as well as the reduction of the capital and shares. And the Partnership Amendment Act of 1865, by which the advance of money on contract to receive a share of profit, or the remuneration of an agent by a share of the profits, was made no longer to constitute the lender or the agent a partner.

Since then the law on joint-stock companies has undergone several amendments.16 A company may now be formed, the directors having an unlimited liability, and the shareholders a limited one. A company is also empowered to reduce its capital by the reduction of its shares, to issue share-warrants to bearer in case of fully paid-up shares; and also to reduce its capital by the cancellation of unissued shares. And by the Act of 1879,17 an Act to amend the law with respect to the liability of members of banking and other joint-stock companies, any company registered as an unlimited company was allowed to register under the Companies Acts as a limited company. An unlimited company may increase the nominal amount of its capital by increasing the nominal amount of its shares, or provide that a portion of its capital shall not be capable of being called up except for the purpose of the company being wound up. The liability of a bank of issue in respect of its notes will continue to be unlimited. Once in every year the accounts of every banking company registered as a limited company must be examined by auditors to be

11 20 & 21 Vict. c. 78.

14 25 & 26 Vict. c. 87.

16 30 & 31 Vict. c. 131, and 40 & 41 Vict. c. 26,