The Sun.
London, England, 1860-11-07 00:00:00

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(From the Money Market R.riew.)
There are few subjects in which the mercantile
rciogmhmtsuannitdyliaarbeilimtioerse deeplyofshareihnotledreersstedinthtahne
jinoitnhte_
Stock Banks. It is instructive to trace the devious
course of legislation upon the matter; we propose,
therefore, to give a brief outline of it.
The distress and misery brought upon the coon_
try by the failure of private banks during the
years 1825 and 1826 induced the Government to
interfere to prevent their recurrence. The remedy
proposed was the repeal of the Act of 1708, which
prevented the formation of banks with more than
six partners. The Government, thereupon, entered
into a correspondence with the Bank of England
relative to the formation of Joint-Stock Banks.
Limiting the liabilities of shareholders by
charters of incorporation, was one of the
conditions proposed. The Bank of England,
jealous of their privileges, refused to support
the latter measure, but consented to the
former. Accordingly the Act of 7 George IV.,
cap. 46, sanctioning the formation of banks with
more than six partners was passed, but it merely
made the establishment of joint-stock banks per-
missive. The very loose manner in which the Act
was framed, and the entire absence of all safe-
guards in respect of the interest of the shareholders
as between each other, very soon became apparent.
One glaring defect was, that if a customer of
such banks overdrew his account, he being ashare-
holder, no action for the recovery of the amount
overdrawn could be maintained ; so also if an offi-
cer of the bank, being a shareholder, appropriated
any of the monies of the bank improperly to his
own use, he could not be presecuted. These pal-
pable anomalies rendered it necessary for the Le-
gislature to pass several subsequent Acts all more
or less providing for the omissions, and explaining
away the doubts which arose in the construction of
the Act; but the clause rendering every, share-
holder liable in his individual capacity for all the
debts and liabilities of the bank was on every oc-
casion repeated, it being enacted that such lia-
bility should continue for three years after he
ceased to be a shareholder.
Several attempts were from time to tine made to
introduce the doctrine of limiting the liability of
shareholders in Joint-stock Banks, but this inva-
riably failed. It was very reasonably argued that
as the Government had, in respect to the Australian
Bank, sanctioned the limitation of the liability of
shareholders, although their banking transactions
were carried on many thousand miles off, whilst
the executive was in London, it was very unrea-
sonable that banks established on the spot, under a
kind of Government supervision, should be deprived
of a similar benefit, if benefit it is. It was urged
that what was good for Australia must assuredly
be good for here. Whilst the pertinence of such
reasoning was scarcely contested, the conclusions
were denied, and the Government of the day re-
fused to sanction the introduction of such a measure.
The temporising policy of Parliament respecting
banking gave rise to Act 7 and 8 Vic., cap. 113.
This statute was passed underthe auspices of the late
Sir R. Peel, who introduced two other measures
of a like tendency. Any one might have supposed
that a measure so imposingly brought before Par-
liament would have been perfection itself, seeing
that the master-mind by whom it was inaugurated
was regarded as almost infallible on the subject of
currency and banking. This Act for the first time
introduced several stringent regulations in respect
to the establishment of future banks. All such were
to be incorporated under letters patent from the
Crown, and not otherwise. The minimum amount
of the capital was fixed, as was also the amount of
the shares into which the capital was divided. All
the shares were to be placed, and one-half of every
share of £lOO paid up; but it very soon appeared
that all the provisions intended to protect the pub-
lic would end in affording no protection at all, they
would be nugatory, if not absolutely mischievous.
It soon came to be supposed that a charter of in-
corporation conferred special powers on the cor-
porate body, and that the difference between a
shareholder's liability in an incorporated and in an
unincorporated company was greatly in favour of
the former. This proved a fallacy, and in no in-
stance so glaringly or so disastrously as in the
failure of the Royal British Bank.
We live in times very different from those when
commercial corporations and charters could answer
any good purpose. In our days industry and en-
terprise want no special protection. They merely
want freedom, and, when left to themselves, will
protect themselves. This principle has been solemnly
recognised by Parliament, and every deviation from
it produces mischief. As a proof of the crampin,c,
character of the Act above cited imposing on all
future banks the obligation of being chartered com-
panies, it may be mentioned that only two banks
were formed under its provisions from 1844 to
1854 ; one of these was formed by the conversion
of a private into a Joint-Stock Bank,tand the other
was the Royal British Bank.
Recent legislation has, however, swept the above
and other Acts from the Statute-book. This was
done on the recommendation of a committee of the
House of Commons. It was not done, however,
without delays and contradictions. The 19 and 20
Vic., cap. 47, passed 14th July, 1856, repeals
the
Joint-Stock Companies Act of 1844, and renders
the formation of joint-stock companies,
liability, legal. The Act contains 116 clauses,
enacts
true to the old prejudice respecting withos e limited
s ,and,
that nothing in this Act contained
persons associated together for
following
c etdhes hpaol lr
pa
opspolsy
ot of
year the
'"Bwanask
banking or insurance. Yet in the
oAAn
Act to Amend
20 and 21 Vic., cap. 49, being_
passed. This
relating to Bank-
ppeeasliss th e above
together c clause, se
banking, s o fa
theßanking
n Joint-StockPanies
This Act re
proviso,r
that no existing Cr
aAscrteolat
relates
p;
eirtsoaolssore
associated
as a limited com-
purposes,
of this Act, it was naturally
pony.
SO devious a course of legislation,
future registeredbanskubsjhecatuthootbis
of the unlimited liability of share-
the questionsopOpnosethe
that passingafter
holders in banks was for ever set at rest—but not
so. The following year, 1858, another Act was
Pa' ssed expressly to enable banks to b.formed with
• •
limited liability. This tinkering of the laws relating.
to commercial enterprise must naturally tend to
create distrust of the stability of the present law ;
for what is to prevent the Legislae next session
passing another measure, stultifying the whole of
their preceding Acts? Although we hear of one
or two attempts to form now banks under the
Limited Liability Act, yet up to this time no bank
has absolutely come before the public to test the
question as between limited and unlimited liability.
It is quite true that the former is most to the
advantage of the shareholders; but whether it will
ba equally so to the customers and depositors
bank, Time, the great resolver of problems,
must alone decide. Undoubtedly the old law de-
terred many influential and wealthy men from be-
coming directors and shareholders in banks. They
will now be able to do so without that dread of the

consequences which is the result of unlimited
liability. The fact of only one of the existing
English joint-stock banks having registered itself
as a limited bank, is adduced as an argument against
the practical value of the measure; but it must be
borne in mind that there are several embarrassing

-..-.
regulations embodied in the Joint-Stock Companies
Acts of 185 G, which are almost sufficient to deter
existing banks from enrolling themselves under
those acts. The general condition of the laws re-
lating to banking is neither so clear nor so permis-
sive of freedom as could be desired. After all the
patching which they have undergone, more is re-
quired. In fact, the whole of the statutes relating
to banking ought to be condensed into one plain
act.

HORSES AND CATTLE.—In support
s condiment in seasoning the food of
testimony mightorbeolaedriutaesekdesduffihocriesnest
of
tihro.Ll-ITsoitoßf iTvilEoicriey.
baeffoorroceiqf all opposition ; for the value of cattlo
tonsliv esweepstock,
dwobt to G9vernment, in shipping
ho have old -
cispdri
cavalry and otherhorses—and during war, wheu s - uch aro
irregularly fed, as in the Crimea ; to
omyeendt tboe
yaol
nl
d those
_. farmers and cow-
keepers who have "ill-thriven " stock, which do
for their keep, or to those who may wish to make not
morpeaoyf
their stock than they now do ; to veterinary surgeons in the
exercise of their profession; and, la
the stl lastly,
to private families
who keep a cow. In short,subjectvitin g elt
is ono of those which
receive,
; andKi
s
stands upon a good foundation, inrirsisenwthalatin-
quiry of all interested in its pro
will doubtless eventually