The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1840-01-07 00:00:00

:hat their forfeiture would be an actual bonus in favour 01

the non-fulfilment of his contract on the part of the share
holder. Directors must therefore consent to relinquish a
considerable portion of their. estimated capital or resort, to
the alternative of law proceedings. 'This alternative it is
which most companies are at present embracing, and its con-
sequences amidst a mercantile community threaten to be so
serious that we may be excused if we express a doubt both Of
its policy and its justice.
In the first place, with respect to the policy of compelling
or attempting to compel every shareholder of a public un-
dertaking, without discrimination (for we do not see how
discrimination can be made without the imputation of undue
preference), to perform what, circumstances, whether arising
from previous indiscretion or unforeseen wants, have ren-
dered him unable to accomplish without involving himself in
ruin, we think that serious difficulties present themselves.
We must confess that we should not envy the situation of a
director, who in the excercise of his duties, was compelled
thus to drag on an unwilling constituency ; neither should
we be able to look with pleasure upon an undertaking, every
step of whose progress towards completion was marked by
individual suffering. To enable any undertaking to proceed
satisfactorily, there must be a mutual confidence between
those who administer and those who provide funds ; and in
the case of a company so situated this could never be the
case. It is true, payment might be compelled and works
might go on to some extent ; but expenses would accumulate
at every step. The shareholder who one day had yielded to
the powers of the law, would, on the first opportunity, get
rid of his shares and his liability, by transferring both to
some man of straw, whom it would be in vain to sue. Others
would be driven to insolvency or bankruptcy, and their shares
thrown back upon the hands of the directors. A constant
struggle would exist between those who wished to escape
from their liabilities, and the directors whose aim would be to
retain them in those liabilities, and the market would be con-
stantly glutted with an unsaleable and unpopular stock.
But this is not the whole of our case. We have proceeded
on the supposition that the directors and a large portion of
the shareholders were unanimous in favour of the stringent
course pursued. But how long, we ask, would such unanimity
remain ? As the share list got diminished by the constant
secession of disgusted or ruined parties, would the remain-
der continue to pay up with ready cheerfulness ? We think
not. Some portion might wish to pause, and for this purpose
would strive to secure the election to the board, of those en-
tertaining the same views, and hence recrimination and dis-
sension would arise, and sink the undertaking yet further in
the eyes tof the public. We must remember too that a
'portion of the capital of all railways is to be borrowed upon
the security of its stock, and upon the stock of such a com-
pany who would lend 1
It may be said this is too black a picture. It may be, but
we do not acknowledge it to be so. To a greater or less ex-
tent all these difficulties will arise, and some of them have
already arisen, and, it must be recollected, that we have not
as yet the experience of any railway having been completed,
where the means have had to be drawn compulsorily from its
shareholders. We have, however, this fact in evidence, that
on lines merely unpopular where additional capital has been
required for stations, locomotive power, or warehouses, (and
what line has been completed without such additional means
being required ?) that new capital has had to be procured at a
sacrifice, in some instances, of one lrlf the amount paid by
the original shareholders ; and it will be sufficiently obvious
that any line of conduct which tends to produce unpopularity
is detrimental to the true interests of the company which
adopts it.
With respect to the justice of the compulsory measures
now adopting towards shareholders, we shall not trespass
much upon the attention of our readers. It is true that on
the part of those who have embarked in any public under-
taking, a contract has been made which ought to be binding ;
but it is also true that many such contracts have been made
under circumstances of delusion and misapprehension, as to
their extent and nature, from which those who originated the
undertakings in question, can scarcely acquit themselves of
some degree of blame. It is well known that many schemes
have received the sanction of the legislature, the sterling
value of which is more than doubtful ; and where the judicial
powers of two houses of parliament have confessedly failed in
detecting imposition, the more limited opportunities of coun-
try shareholders may well have allowed them to be led into
unwary and unwise engagements The nature of railway pro-
perty, its liabilities, and the legal modes of transfer have been
little understood; and many ignorant persons have been in-
duced, by the persuasion of others, to embark their little sa-
vings in schemes of which they knew as little as the pen with
which they signed their ruinous engagements. Others hav-
ing so embarked have afterwards sold, but for want of proper
information have omitted to transfer, and although their in-
terest in the undertaking has long ceased, their liability re-
mains, and they can be compelled to pay calls upon their
shares, whilst they cannot legally regain an interest in the
property for which they are paying.
Under all circumstances we think that there exist strong
grounds both of policy and justice to induce directors of any
public undertaking to weigh well their 'steps before com-
mitting themselves to extreme measures. They'had a duty
to perform towards the body of shareholders, whose repre-
sentatives they are, but they have also a duty to perform to-
wards society ; and in the exercise of that duty they 'ere
bound to use the great powers entrusted to them with mode .
ration and forbearance. They may possess 'the previous in-