The Sun.
London, England, 1857-09-24 00:00:00

THE LAW 0

LIABILITY.

An instructive illustration of the working of the
aw of Limited Liahility has been furnished in the

.tt.se of the Manchester and Foreign Warehouse
Company, which it was resolved on Monday last
should be wound up. After an existence of 18
months a paid-up capital of 40,0001. has been
almost entirely made away with, and there is even
a possibility that an additional 10,0001., for which
the shareholders are responsible (the total sub-
scribed capital being 50,0001.), may be required
)( fore the liquidation is terminated. The pro-
medings by which this rapid result has been
.irought about are known only partially, the one

great desire of the victimised- Parties being, of
ourse as in the care of the Surrey Gardens and
,ther similar instances, to keep clear of the further
damage they might sustairr by allowing any appeal
to be made to the Bankruptcy Court.. But it ap-
pears that while the ruin was making rapid pro-
Iresi the directors, in orthodox fashion, declared a
lividend of 5 per cent, out of profits. The affair
herefore is, probably, in all its features, exactlx
.kin to the general run of those joint-stock develop-
ments with which the public have been lately made
tamiliar. It has, however, the peculiarity of hay-.
ng occurred under the Limited Liability Act ;
and as the equally rapid career of the Surrey Gar-
lens Company under the same law has almost
simultaneously been exposed, a question will
naturally arise regarding the inferences it suggests
sto the safety or value of this measure. Some of
hose who distinguished themselves by opposition
b.) it will probably exclaim, " How can there be
my question at all in the matter ? Here we see

ticquilies as bad as any that ever occured under the
ld t.ystera take place with a degree of speed never
before witnessed, and which shows that the new law
iv-bile it has no effect in driving rogues or incapables
nit of the field, by giving facilities to new and better
men, operates ascii inducement to the publicto enter
with more levity than ever into such undertaking-6"
But this would be a very superficial view, and the
Cad is that the circumstances of the' cases now be-

tore u., instead of affording an argument against
rho law of limited liability, are calculated to con-
arm.all that has been urged reTecting its adNr-an-
tages. Both these companies, as well as several
) hers of a like description which have quietly
broken up during the last six' months, have been
brought to a stand by the simple fact that the law
of limited liability prevented them from getting
iredit, and that consequently when all the share•
.olclers' subscriptions bad been absorbed they had
io choice but to suspend. If they had been com-
panies constituted on the old principle there would
have been many stages before the avowal of insol-
vency. Money would have been borrowed on de-
sutures, and credit would have been eagerly given
b.) the Board by speculators and tradesmen on the
strength of the names of some half-dozen persons
n the list of shareholders, who would have been
narked out for ultimate prosecution to their last
hilling and their last acre ; and, instead of a rapid
collapse, we should have had several years of flam-
ing reports and high dividends, the final break-up
)eing deferred to some convenient period of general
pressure, when it could be attributed to the opera-.
don of the Bank Charter Act, or any other cause
except the true one. Other persons as well as the
3h:4n:holders would then have been ruined, and the
ermination would have been found only in a gene-
ral and disastrous compromise. In the present

case the shareholders Zone suffer, and these, in-
tead of being altogether consumed, have simply
burnt their fingers and bought au amount of ex-
perience well worth the money. At this period
my pity for shareholders as a body would be pre-
posterous. If they will quietly permit men who
lave declared dividends out of loses, or coin-
tated such other defaults or deceptions as have
lately been common, to escape all punishment
,r even censure, the conclusion must be that
they rather enjoy their fate. Of course they
to not like to lose their property, but the exer-
cise of an approbative benevolence in letting
ff delinquent directors is evidently sufficiently
;ratifying to be looked upon as a compensation.
shareholders, therefore, niay be very well left to
pass their votes of approval, forward their proxies,
-Lod perform all the other ceremonies considered
proper in such cases. If the public have anything
o say on the matter, it must. be to complain of the
lemoralising example thus set. It is the commu-
nity at large that are to be considered, and for them
,t is plain that the law of limited liability, by
eorcing every unsound concern to close its business
as soon as it has exhausted the means of its volun-
at y dupes, is operating as favourably as could have
bet n desired.—Times City Article.