The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1854-02-28 00:00:00

`THE LIVERPOOL STANDARD, AND .GENERAL COMMERCIAL ADVERTISER.

-131tberpoot ''''':.tanbarb.

binations of men against masters less frequent. Such an
argument is absurdly ridiculous, for if masters were
willing to receive their workmen as partners, the latter,
who have ..-nothing to lose but the capital they have em-
barked, can never be deterred by any liabilities under the
present system. The objections raised by Mr. CARDWBLL
to granting the special privileges conferred by Charters of
Incorporation, may, or may not, be founded in justice
with reference to the particular cases in which they have
been denied ; but they by no means amount to a sufficient
reason for inflicting upon the mercantile community the
far greater evil of altering the law, so that partners' may
of their own will set up a right to limited liability. The
question mainly depends upon the nature of-the under-
taking, and the decision as to the validity of -the claim is
very properly vested in a responsible Minister of State
and, if he be neglectful of his duty, in the last Court of
Appeal—the High Court of Parliament. The only excep-
tion to this rule is the Stannaries Court of Cornwall,
specially applicable to mining, and peculiarly adapted to
this hazardous species of adventure; and a bill is now
before the House of Commons for extending the same law
to the county of Devon, where mining, for copper, lead,
and other metals, is carried on to a considerable extent.
By this, which is known as the cost-book system, calls
are regularly made as money is wanted, and the directora
have no authority to pledge the credit of the shareholders,
or incur any liability, beyond the amount contributed.
Shareholders can also at any time dispose of their shares,
or by surrendering them to the remainder free themselves
from any further loss. This system, it will be seen, is
particularly appropriate to mining adventures,-which are
purely speculative, resulting in large profits or absolute
loss, but is in no way applicable to ordinary mercantile
pursuits, in which necessarily third parties as creditors
are largely interested. It may be possible, however, to
show other instances in which a similar system would
beneficially apply, but as all such cases are provided for,
by the means to which we have before alluded, the
position assumed by those who demand an alteration
of the law is not only untenable, but it is fraught with
so *lnch prospective danger to mercantile credit as to
justify the most strenuous opposition to its enactment.

AMERICA: •
ARRIVAL OF THE ARABIA.

TUESDAY MORNING, FEB. 28, 1854.

LIMITED 4- UNLIMITED LIABILITY.

THE important question of limited partnership liability
is exciting a very considerable share of public attention,
and the more so from the over-temperate zeal which ap-
pears to have animated those who have taken a prominent
part on either side.. As a subject which may materially
affect many mercantile operations, it has very properly
been taken up by the Liverpool Chamber of Commerce, by
whom it has been discussed at much length ; but, in
offering any observations upon it, we shall do so without
reference to the opinions which have been expressed by
the several speakers, most of whom seem to have shaped
their arguments with reference to their particular indivi-
dual interests, rather than the bearing of the whole sub-
ject upon the mercantile community. It may be pre-
mised that partnerships of limited liability are by no
means unknown to this country—the Bank of England is
a striking instance—the Church of England Assurance
Company enjoys the privilege by its Act of Parliament,
and, indeed, every corporation, whether founded by Act
of Parliament or by Royal Charter, is a partnership of
limited liability. The advocates for retaining a system of
unlimited liability argue, with great justice, that it is
simply a question of honesty, whether two or more persons
should do that conjointly which they could not do indivi-
dually—whether they should adventure for profits without
being liable for losses ; and whether, if the privilege of
nonpayment of debts be given to a partnership, any valid
reason can be assigned why it should not be given also to
individuals. It cannot be denied that such reason would
be unanswerable if the admission of limited liability be
made to apply, as its advocates demand, after either the
French or American systems, where the title to the prin-
ciple depends upon the will of the projectors, and is valid
after some form of public announcement. Such an alter-
ation of the law, it is justly asserted, would open the door
to a multitude of rash speculations, involving not only
shareholders, but their unsuspecting creditors in ruin,
and render far more disastrous than they have hitherto
proved, those bubble manias which occasionally seize
reflecting Englishmen—which inflict a heavy blow and
great discouragement on commercial credit, and involve
many a hapless widow and orphan in irretrievable loss
of their means of subsistence. It is a fact of which Eng-
land has some reason to be proud, that while both in
France and in America, where partnerships of limited
liability are common in commercial speculations, failures
form the rule, and success the exception ; here, where every
man who seeks a profit pledges all he is worth to the credit
of the speculation, the reverse is the case, and failures
form the exception. If, indeed, it is impossible in ordinary
mercantile transactions but that credit should be given to
those who adventure in speculation, and losses should
ultimately result where profit was expected, it is certainly
not only justice, but common honesty, that those who
would have shared-the gains, had there been any, should
bear the loss rather than it should fall on innocent credi-
tors. To make such an alteration in the law as is pro-
posed by those who hold out France and America as
examples, would be to afford a direct encouragement
to scheming adventurers, to sap the foundation of
that commercial credit which enabled England to
stand the shock of a world in arms, and to foster
a spirit of rash speculation, which it is the policy
of our commercial laws to restrain as far as possible.
If under the existing system, where the risk encountered
must operate as a prudential check, such a spirit of
adventure was evoked as led to the monetary panic of
1826, caused by foreign mining companies and other
bubbles ; the corn speculation of 1828, the commercial
panic of 1837 ; the railway mania of 1845 ; and the
monetary panic of 1847, how direful must have been the
consequences had a system of limited liability been per-
mitted to prevail, changing, perhaps, the direction of the
blow, but only to involve a larger number of more
innocent victims. It has been abundantly shown that
legitimate enterprise requires no such stimulant; the love
of adventure is still a predominant passion when large
1 profits are looming in the distance, and the law, in im-
posing unlimited liability upon those who claim a right
to the expected gains, does but guard against the losses
being thrown upon those who should neither in justice nor
in equity be subject to them. While, therefore, for palpable
reasons, the position assumed by those who argue for the
retention of unlimited liability is founded on reason, justice,
and common sense, as well as on sound policy, it must not
be presumed that there are not many exceptions, admitted
in practice, but each judged of according to its own merits.
Unlimited liability has been always the rule in England
but up to within a very recent time, it was the practice,
when a Company or Association was formed for a par-
ticular object, to apply to the Government for a Royal
Charter of Incorporation, or to the Legislature for a
private Act of Parliament, by which the liability of the
partners was limited to their respective shares. In such
cases it will be seen that limited liability was an admitted
principle, dependent only in its application on the will of
the Government or the Parliament. Since, however, Mr.
CARDWELL was appointed to the presidency of the Board
iof Trade, he has opposed the grant of such privileges in
cases similar to those where' they had been previously
allowed, and by his refusal in the, instance of the Canadian
Steam Navigation Company, which was formed for the
establishment of a line of screw-steamers between this
port and Canada, led to the animated discussion which is
now taking place, on the propriety of altering the law on
this subject. It will be remembered that the application
for a charter conferring limited liability on the company
referred to, was opposed by several remonstrances from
parties largely interested in steam-shipping, on the ground
that it was an unfair preference to one company over
many others, in which the shareholders were subject to
unlimited liability, and that if the trade between Liver-
pool and Canada was sufficiently remunerative, there was
no lack of capital and enterprise to undertake it without
exclusive privileges—objections which were met by the
rejoinder, that the Canard line in particular had the ad-
vantage of a subsidy from the Government for the mail
contract service, while the traffic on the Canada line was
not of itself sufficient to justify a large outlay, without
some protection against heavy losses to individual share-
holders. Without entering into any comments on the
merits of the respective arguments, pro. and con., we may
state that the opposition was successful, the charter of in-
corporation was refused, and the company obtained their
object by an act of the Canadian legislature. The subject
gave rise to much discussion, in which Mr. BROWN, M.P.
for South Lancashire, Wok a prominent part, and the
government issued a commission to inquire into Mercantile
Law, one of the points of investigation being the subject
of limited liability partnership. Pending this inquiry, a
demand has been made and enforced, by pamphlets and
other means, for an alteration of the law, so as to assimi-
late it to that of the United States, which provides for the

voluntary incorporation of individuals for the purposes of
manufacture, insurance, the construction of railways, dc.,
rendering the stockholders exempt from all liabilities
beyond debts due to workmen and servants. This altera-
tion is insisted, on upon the broad grounds of general
utility, rather than its applicability to particular cases,
and the right of government to decide upon its appli-
cation is broadly denied. This may, therefore, be
considered as, the question at issue, and parliament may
be called upon to decide whether, in future, sleeping
partners may be earning the profits of adventurers, and
at the same time be free from all liability beyond the
amount of their capital embarked. On such a• point we
have no hesitation in deciding in the negative, inasmuch
as it would at once destroy that confidence in unlimited
respoiisibilitY, which, however imperfectly it may occasion-
ally-operate, constitutes the great safeguard of commercial
credit. Under such a law it would not be difficult to

suppose a case where the capital might be found by sleep-
ing partners, in a speculative concern, drawing at one
time enormous profits, and leaving subsequent debts to
the liability of active partners, worth little or nothing,
the deluded creditors being the real sufferers. Under the
proposed system such cases would be of no uncommon
occurrence, until credit would be shaken and commercial
houses suspected, for the very cause which some of them
now seek to establish. We could mention an instance
where a Whig nobleman, now deceased, entered into large
building speculations to improve his own estate, at a time
when such adventures more often resulted in losses than
in profits. His steward was, however, put forward as the
principal, and, in course of time, became bankrupt ; his
lordship, as a creditor, obtained a dividend from the estate ;
the unfinished buildings were purchased at a merely no-
minal price, and the heir of the cunning Whig now enjoys
the profits- of the vast improvements effected at the expense
of the steward's creditors. A law of limited liability
would but legalise such transactions, and all the advantage
attempted to be gained would be to deprive the nominal
lender of capital of his right to prove on the bankrupt
estate as a creditor. A point has endeavoured to be set up
by those.who advocate a system of limited liability, that it
would encourage a neon of workmen possessing small
capital jn.factories, and thereby render strikea and com-

By the British and North American Royal Mail steam-
ship Arabia, Commodore Judkins, which arrived on
Saturday, we have intelligence from Boston to the 15th,
and from New York to the 16th instant. The Arabia
sailed from Boston at 10 10 p.m., on the 15th instant.
At 10 30 p.m., on the 16th, she passed the steamer
Canada, hence tor Boston, and at midnight arrived at
Halifax. After a detention of about one hour and a half,
she proceeded to sea, passed Cape Clear, at 1 10 p.m., on
the 24th, and saluted the Rock at 11 9 a.m., on Saturday,
having made the run in nine days sixteen hours and
forty-five minutes. The Royal Mail steamer• Africa ar-
rived off New York on the 14th. The Royal Mail steamer
America arrived at Boston on the 16th from this port.
The Arabia brought 84-passengers, but no specie.
The cotton house of Estifin and Co., of New Orleans,
had failed, as well as two other commercial houses.
It was reported that the steamer William Norris,
building at New York, and which is expected to make the
run to Europe in six days, had been sold to the Turkish
government for $230,000. The vessel will be 230 feet
long, 38 feet beam, and will draw seven feet six inches
water. She will be 1,4430 tons burthen, with a draft of
1,000 tons.
The Star of the West and the George Law had arrived
at New York with nearly $1,500,000 in gold dust on
freight. On the sth inst., in lat. 25 04, lon. 80, she passed
a British seventy-four, steering north. The steam-ships
Nevada, and John L. Stephens had sailed from San Fran-
cisco, with $1,872,012 on freight. The arrival of golddust,
shipped from California in 1853, was $82,300,399. 42c.
According to advices from Lower California, the Mexican
rancheros had submitted to, and asked the protection of
the Government of the New Republic. President Walker
had issued a proclamation, in which he stated that warfare
seldom used among civilized nations had been used against
his government, as if he and his piratical expedition were
entitled to the usages of civilized nations. During the
engagements which occurred, one of the leaders of the
fillibusters was accompanied by his wife, who employed
herself in loading and passing the arms to the men, and
repeatedly firing upon the enemy through the loop-holes.
It is stated in the Mexican advices, that the Tehuante-
pec-road had been commenced at Minatitlan on the 30th,
and at Suchil on the 25th ult. A telegraph despatch
from New Orleans says,—" A door and window tax had
been proclaimed throughout Mexico. It was stated that
a body of Mexican troops had been ordered to proceed to
Sonora, to assist in quashing the Walker filibuster expe-
dition. The Indians in Durango had been routed, and
the property stolen by them recovered. The ship Lady
Suffolk had sailed for Yucatan, with several hundred
troops for the Indian war. A conducta had arrived at
Vera Cruz, with two millions of dollars in silver, the most
of which was taken by the English mail steamer.
From Havana we have dates to the Bth inst. Sugar
was in improved demand; stock on hand, 65,000 hhds.
Coffee was firm, with a large business doing. Molasses
scarce, and selling at 2i reals. Freights had advanced,
£5 being paid to Europe. ' •