The Sun.
London, England, 1858-05-14 00:00:00

IMPERIAL PAR LIAMENT.

HOUSE OF COMMONS.—(YESTERDAY.)
JOINT STOCK BANKING COMPANY BILL.
Mr. lIEADLAM moved the second reading of this

bill.
Mr. BLACK moved that the bill be read a second time
that day six months. He did not object to the principle
of limited liability generally. Commercial companies on the
principle of limited liability, traded upon their own capital;
but a bank, if it were allowed to be conducted upon limited
liability, would trade upon the capital of other people. If
the banks of Seetl,4lnd had been upon the limited liability
principle, they would all have been swamped during the
late panic. Unlimited liability was their sheet anchor, and
'bat enabled them to weather the storm. .11:2 moved that
--(NILAT seconded the motion, and contended that
1,- 'sill be read a second time that day six mouth.
"sty, as applied to banks, would be a most
tlnimeMi'rtedl tiabh.

consideredi,i, that there were extradrs
dangerous prim'',
o. a and that it was a false priu-
er rate of interest could be
ciple to lay down that a high,
obtained with ample security.
R. W. CARDEN thought the ;_:.!
Sir 11 would inflict a
injustice upon all persons who advancess
d nMa rr. D
deceptionsUA Ni
e
great their money
in banking operations. Under this bill the old banks
have jest five times the advantage over those establiehast
under
Sir Robert Peel's Act. At the same time, he thought
the capital of the banks should be as far as possible equalised.
Sir W. DUNBAR considered that limited liability hay-
ing been affirmed as a principle by that house, banking
should form no exception. The object of the member for
Newcastle in this motion was to remove the impediments
that now existed to the establishment of co-partnerships to
at present formed the only exception, It
hwandiebheebannskaiicnig that limited responsibility would check wild
speculation and fraud, but every member of that house
would bear painful testimony to the fact that unlimited
liability counted its victims by thousands, many of them
females, while a system of limited liability, he believed,
would be productive of great advantage. In banking ope-
rations he believed this would strictly apply, as an ordi-
nary- failure would be pi:eductive of comparatively little
disadvantage, because there would be a regular audit of
accounts, and altogether a better system of management.
-Unlimited liability, he held, diverted capital from its legi-
timateis-duced speculative persons to invest it
enterprises. (Hear, hear.) He
ai hnaugu: doubtfulthe°u e whole:117 and
ddi dangerousffiu t y ay issne out of this question
might be met by compelling banks to lodge securities for
the issue of notes, and to hold gold for the balances. In
the Isle of Man the issues were protected by mortgages on
land, and he saw no reason why that principle might not
be applied to England, He did not think there was any
necessity for this special legislation, and ho did not think
that the house should be called upon to give experience to
the rash, wisdom to the innocent, or honesty to the un-
principled. (Hear, hear,)
Mr. BOVILL considered that the bill was nothing more
nor less than an attempt to protect directors and managers
of banks at the expense of the public interests. (Hear.)
It would, he believed, lead to the utmost recklessness of
expenditure. If there was one thing more than another
to be looked for in joint-stock banks, it was that there
should be security to customers, but hat would be de-
stroyed by this bill. A great object in banks was to secure
good management, and it would be for the house to con-
sider whether that enlist best be obtained by leaving per-
sons at their head who were eutirely responsible, or per-
sons who had little or no interest in the success or failure
of the concern. The general tendency of the house had
been against extending the principle of limited liability,
and it was well known that whenever concerns failed under
this act the creditors hall been more than usually sufferers.
If the objection to the present banks was that they accu-
mulated too much capital let there be a restriction imposed
upon their power of borrowing money. The principle of
limited liability would, he contended, in no way check
reckless trading, and he quoted from financial authorities
to show that no commercial security would bo derived
from limited responsibility. The case of banks was widely
different from that of ordinary private commercial specula-
tions, for wholesale ruin followed upon the failure of a
bank; but the loss in the latter speculation was confined to
the persons directly managing them. He believed this bill
originated in the misfortunes of those who had been direc-
tors and shareholders in unsuccessful banks. Now, he
insisted that the loss accruing from such speculations ought
to fall upon the directors and shareholders, not upon the
depositors and the public ; for the directors and share-
holders had the full benefit of the profits of all such con-
cerns. Nor had the depositors the slightest voice in teem-
ing the direction of these concerns. The accounts of banks
were kept from the view of the public, and it wao impos-
sible for them to be cognisant of their affairs. No case of
necessity had been male out for such a measure. The only
hypothesis on which the bill, as at present explained, could
be urged was that it was desired to relieve directors and
shareholders of that responsibility which would attach to
them. (Hear, hear.)
Mr. GURNEY admitted that the principle of limited
liability must ultimately be extended to banks if it were
preserved for commercial speculations generally ; but ho
opposed the bill on the ground that the experiment of
limited liability was yet on its trial, and its success not
yet proved. Should a favourable result follow the experi-
ment he should be ready, at some future period, to sup-
port the extension of the principle to banks. (Hear.)
Slr C. LEWIS said that the Legislature had already
affirmed that trading associations might limit the amount
of their liability ; an 1 the question now was, whether a
case could he made out for excepting banks. (Hear.) There
was a difference between a more bank of deposit and a
bank for general purposes, where deposits bore interact,
and the question arose whether there was any reason why
banks of deposit merely should be made an exception from
the rule. But, practically, most joint-stock banks allowed
interest or the mousy deposited, and there was no difference
between banks of depoit and other trading associations, so
far as regarded the principle of limited liability. Ho should
therefore vote for the second reading of the bill, the opera-
tion of which was to be permissive. The right hon. gen-
tleman entered into a defence of the principle of limited
liability, as giving the shareholders in joint-stock banks a
greats, control over their affairs; but he admitted that
depositors who imposed implicit confidence in the directors
entered into a voluntary contract, and ought to bear, with-
out repining, their own proportion of any Joss which might
occur. (Hear.)
Mr. MALINS contended that as free trade had been
made to apply to trading associations generally, joint-stock
banks ought not to bo made an exception. He cordially
supported the second reading of the bill.
Mr. BAXTER was altogether opposed to legislative in-
terference as to the manner in which capital should be in-
vested. (Hear, hear.) The present bill was permissive in
its character, and he should therefore give it his support.
Mr. SHERIDAN gave his most cordial assent to the
second reading of the bill.
Mr. SPOONED, intended to vote for the second reading
of the bill. (Hear, hear.) He had, undoubtedly, continu-
ously opposed the adoption of the principle of limited lia-
bility, but as the principle had now been recognised in
practice, he could not see why one particular set of trad-
ing companies should be exempted from its application.
The CHANCELLOR of the EXCHEQUER also declared
his intention of supporting the bill, as it appeared to him
to be calculated to terminate a restriction. (Hear, hear.)
He would not enter into the question of the merits of the
principle of limited liability, as that question was not be-
fore thorn ; the only point which they had now to consider
was whether the operation of the present law restricted
the business of banking. It was indeed matter for grave
doubt whether the extension of the principle of limited
liability to honking would be very much availed of. For
himself he could not help thinking that banks conducted
upon such a principle, when they came to be placed in
competition with those acting upon the principle of nn-
limited liability, would not be able to hold their ground.
He thought the end must be that the public would show a
preference for banks founded linen the principle of un-
limited liability. But that if were so it vs as quite certain
no great danger would result to the public from the re-
moval of the present restriction. On the other hand, per-
haps, with the recent flagrant abuses of the present system
staling them in the face, the public might be induced,
should this bill pass, to exercise a greater caution than they
had hitherto done. In either alternative, therefore, the
passing the bill would be of advantage. There was, how-
ever, an objection to the bill—namely, that it was to have
a retrospective effect. Now he did not think that banks
founded upon the principle of unlimited liability should be
allowed all of a sudden the power of lessening the security
which they had offered to their creditors. It might be said
there were some who would prefer the security of a
bank conducted upon the principle of limited liability ;
that might be so ; however, he did not think there was
much chance of such a preference being shown. He
was strongly disposed to think, therefore, the change
contemplated by the bill would operate unjustly towards
the creditors of banks founded upon the unlimited lia
bility principle. At the same time that objection, if
valid, was one which could be best removed in committee.
(Hear, hear.) It might be perfectly true that they had
not sufficient data before them to guide to the formation
of recent conclusions with reference to the working of the
principle of limited liability, perhaps, even, they might
ultimately have to retrace their steps.
But, granting
all that, that really was uo objection why they should not
I
apply the principle at present in operation to banking. a
therefore intended to support the motion for the second
reading of the bill. (Hear, hoar.)
Mr. HEADLA.M: having made a few observations in re-
ply, in which he contrasted his position on that occasion,
when every one seemed ready to support his proposal,
with the small countenance offered to him
in previous
sessions when advocating a similar policy.
The bill was ordered to bo read a second time, amidst
cheers.

The house h CHURCH RATES.
bill, having resolved itself into committee on this

On clause 1 being proposed,
Sir J. T.R.ELAWNY said that before proceeding fur-
met. In the first
ther he desired to answer some objections on the part of
opponents of the bill, which he thought had been imper-
fectlyhouse that church rates were established upon the principle
that every inhabitant of a parish used the parish church,
place he begged to remind the
and therefore every one had an interest in the maintenance
of the fabric of the churches. Now it was a fact that at
least five millions of the population never entered their
churches at all ; therefore the principle upon which church
fates originally rested was upset. Again, it was argued
that as men bought their properties subject to church-
rates, no injustice was done in comp:Ting all persons to
pay them. What, however, did the law ? Why, in the
Braintree case it was established as the law of the land
that a church-rate could not be levied unless a majority of
the vestry voted for it. Well, if that were so, what be-
came of the argument that all men must pay church-rates,
because all mon bought their properties subject to them ?
He desired to see the church-rates abolished, because he
wanted to see the Church of England made areally national
church. He was not sure either that clergymen of the
Church of England came before them with clean hands
He was inclined to think that clergymen ought properly
to give daily services, and until they did so they should at
least be denied the right of demanding rates to keep their
churches in repair.
Mr. D. CeItEFFITH would be disposed to regard the
bill more favourably if he saw how the churches in remote
country parishes were to be supported. Probably the
working of the voluntary system would suffice for the pur-
pose in the case of large towns, but in the case of remote
country districts the working of such a principle wonld be
fruitless. For himself, he confessed to seeing no difference
between tithes and church-rates ; if they abolished the
one, why tot the other ? Indeed, of the two, he thought
Dissenters were more opposed to the payment of tithes,
inasmuch as they went to support the preaching of doc-
trines to which they were opposed—whereas church-rates
merely went to support the fabric of churches. Tho bill
was of so uncompromising a character that he could not
give it his support. (Cries of " Divide.") He hoped the
house would agree to a compromise of the suggestions that
hat been made, and not give its assent to an extreme mea-
sure that would never be passed by the other house of
Parliament. (Cries of "Divide.")
Mr, AIELLOR said he was not one of those who enter-