The Sun.
London, England, 1857-12-09 00:00:00

quences, it was the duty of Parliament to enforce the
principle of the limited liability of shareholders in such
banks. To that conclusion he (the Chancellor of the
chequer) for one objected, without some further informa-
tion being obtained on the subject, and therefore he could
not agree with hie hon. and learned friend or vote for his
resolution. Tne question was one of interest acd import-
ance at the present moment, and perhaps the house would
allow him to express hisopinion upon it. One distinction,
it appeared to him, bad not been sufficiently adverted
to in that debate, and that was that the functions of
banking were twofold. One of its functions was that of
issue, and the other that of deposit. It seemed to him
that there was a great difference in dealing with the
question of theunlimited liability of shareholders in refer-
ence to those twofunctions. When a country bank issued
notes, which were not a legal tender like those of the
Bank of England, nevertheless, in the district in which
the bank was situated these notes passed current from
hand to hand, and practically discharged the function of
money,' no one; had the option of accepting or refus-
ing them. Therefore a country bank note passed current
not on the credit of the person who tendered it in pay-
ment, but on that of the bank from which it issued, and
a tradesman in a country town who took • note offered
to him in payment for his goods-was not in a condition
to refuse it, and he took it not on the credit of the person
tendering it, but on that of
,the bank which issued it.
He was not like a depositor, and unless it was required
that there should be a deposit of securities equal to the
issue of Dotes, or that notes should be issued only against
bullion, by a system placed under the custody of public
functionaries, it would not be reasonable to deprive the
holders of such notes of the security of the unlimited lia
bility of the shareholders of a bask. With regard to that
part of the functions of banking be altogether dissented
from the doctrine of his hon. and learned friend, that the
principle of unlimited liability had given rise to a system
injurious to the public interests. On the contrary, it bad
given rise to a species of security to which the public
were entitled, and of which it would be unjust to deprive
them. However, the argument of his hon. and learned
friend applied not to that class of the buainess of banking
but to the deposit part of its functions. N o doubt many
joint-stock banks might be considered as mercantile
agencies, and when we applied to other mercantile
associations the principle of limited liability, many
reasons might be fairly alleged for the, including
of joint stock banks, so far as regarded that -portion
of their business, on the principle of limited liability.
But he wish( d to call the attention of the house to
the manner in which that privilege was introduced
into our legislation. We begin with that class of joint-
stock projects in which a large expenditure was involved,
such as canals and railways, and the argument on which
the house proceeded, and on which • t anthcrised an
especial statute derogating from the general law, was
that it was desirable to encourage enterprise, and that
the best mode of doing so was by adopting the principle
of limited liability. In that way that principle was first
introduced into our legislation, first in our local legisla-
tion, and then in a general statute applicable to all cases
of general enterprise, and it was always understood that
the argument on which it was founded was that the
adoption of such a principle tended to encourage mer-
cantile enterprise. That argument, however, did not
apply to banking. There was no object in encouraging
enterprise in that direction, but it was rather an object
to check the tendency to speculation of that kind than
to increase it ; and he believed that one effect of limited
liability would be in some degree to repress undue credit,
inasmuch as the knowledge that various wealthy persons
were among the shareholders of a joint-stock bank would
induce discounters to look merely at the name of the
bank on a bill, to be indifferent about the value of the
hi' itself, and not to inquire into its credit and quality.
It was not an unfair argument, therefore, to urge that
if the liability of shareholders was limited, and the credit
of a bank was less comprehensive, people would look
rather to the nature and quality of a bill itself than to the
bank which had endorsed it, which would tend to intro-
duce a wholesome caution in such transactions. That
was an argument, however, for further consideration,
and looking to the argument of his hon. friend, the
member for Southampton, who spoke with so much
ability in the debate, that the majority of joint-stock
banks which had failed had proved to be solvent, it
was an argument in favour of the maintenance of
the present law, and for not abandoning that security
which the depositors now possessed. The suggestion
he had to make to the house was that if they agreed
to the motion which he should submit to them on
Friday next for the appointment of a select committee
to inquire into the question of banking generally, they
should leave the question of limited or unlimited liability
with respect to joint-stock banks and other banks to be
considered by that committee. It was a subject which
properly fell within the scope of that inquiry; and, as
the question of the security to be taken for the issue .of
notes could hardly be considers'' by itself, and without
reference to the question of general mercantile agencies,
it seemed to him that the course he now proposed iva,
more likely to lead to a satisfactory conclusion than the
motion of his hon, and learned friend.. He should vote
against it.
Mr. MALINS urged that the main cause of the disasters
which had recently occurred to joint-stock banks was the
maintenance of the principle of unlimited liability. It was
said that the business of banking was different to that of•
other trades, because it was a trading with the capital of
others, but there was no (ifference between tradingon credit
and the capital of other persons, which was the case in every
trade. Again, it was said that ere ought to be a difference
made between the case of joint-stock banks under limited
and unlimited liability, sill that in case of the former
there should be a large reserve of capital. The lion. mem
her for Southampton said he could not trust an unlimite I
liability bank • and would any man now join a joint-stock
bank established oa the principle of unlimited liability ?
Was it not desirable that prudent and cautious mon should
be connected with these concerns? and that could only be
done by adopting the principle of limited liability. He
agreed that the motion of his hon. and learned friend was
not pat in a tangible shape. Every one Was agreed that
the present state of things was unsatisfactory, and the
house ought to be glad of the opportunity of considering
whereer some steps should not be taken for improving the
banking system of the country.
Mr. T. lIANKEY said that if he thought that the
motion of his hon. and learned friend be interpreted
into a compulsory law to compel the adoption of limited
liability by all joint-stock banks, he would not support it;
but he understood that the motion left it oper4to joint-stock
banks to adopt the law as it already stood with regard to
other joint-stock companies. He had heard no argument
which showed that it would be nnadvisable that the law of
limited liability should be applied to joint stock banks,
which he believed would cause greater confidence in
them, and induce capitalists to embark in them. He
begged to move as an amendment, " That the present
law, enforcing the unlimited liability of shareholders in
joint stock banks, requires alteration." He believed
these words would meet the views of his hon. friend, and
would be in accordance with the resolution which the
house had already adopted.
Mr. CRAUFURD seconded the amendment,
Mr. BUCHANAN said as the subject was one of so
much importance, and involved so much difference of
opinion, be thought the house would act prudently in
adopting the suggestion of the Chancellor of the Exche-
quer, and referring the question to a committee.
Mr. HEADLAM, in replying, observed that he did
not think the motion ought to be got rid of by special
pleading, and expressed a hspe that the house would
pronounce an opinion that the law required alteration.
Believing that the reference of the matter to a.committee
would be perfectly nugatory, he could nut consent to the ,
adoption of such a course. He, however, had no objeo-
tioto to adopt the words of the amendment suggested by
his hon. friend.

The original motion was then put and negatived, and
the amendment was put as an original motion ; on which
the house divided. Toe numbers were :
For the motion
Against it
Majo:ity
THE BEVERLEY ELECTION—PROSECUTION

OF MR. GLOVER.
•
On the motion of Mr. J. A. SMITH, the resolution
which upon the 3d of August last was reported from the
select committee on the Beverley election petition, was
read. The hon. gentleman then moved, in conformity
with that—riAolution; tha't Mr. Attorney-General be
directed to prosecute Edward Auohwuty Glover, Esq-,
in respect of the declarations made and signed by
him under the act of. the Ist and 2tl -of Victoria,
cap. 43 ; that the proper officers of this house and the
shorthand writer attending this house have leave to
attend and give evidence, an 1 to produce such papers and
documents as may be required on the trial of the said
Edward Anchmuty Glover, Esq.
The motion was agreed to.
TRANSPORTS TO INDIA.
• On the motion of Sir C. NAriEn, a return was ordered
of the names of transports taken up for India, specifying
whether steamers or sailing vessels, their tonua;e, if
steamers their horse power, the number of men each car-
ried, rate of passage money, the date of sailing, and the
date of arrival as far as is known.
COMMITTEE ON PUBLIC PETITIONS.
_

OR the motion of Mr. BONHAM CARTER, the following
hon. members were appointed and nominated as the select
committee on public petitions :—Mr. Bonham Carter, Mr.
Thorneley, Mr. Scott, Mr. Adderley, Mr. Owen Stanley,
Mr. Henry Austin Bruce, Mr, Gregeon, Mr. De Vere,
Mr. Wise, Mr. lDillwyn, Mr. Charles Forster, Mr. Gard,
Mr. Davison, Mr. Woods, and Mr. Taverner John Miller.
Three to be the quorum.