166 REPORT—1857. 
It was also argued that if banks had limited liability, a large proportion of those 
who are now depositors would become shareholders ; the proportion of share capital 
to deposits would be increased, and the banks would be sounder and safer. 
For the purpose of security, it was urged that directors ought to be under unlimited 
liability ; and that auditors elected by the shareholders should have full powers of 
investigation. 
These suggestions apply to what is properly banking. With respect to the issue 
of notes, it was proposed, that should Parliament decide on its increase, any party 
should be permitted to issue notes against bullion and securities; but that companies 
should not be permitted to issue notes to a greater extent than their paid-up capital, 
It was also suggested that the State onght to withdraw its account from the Bank 
of England and keep its own cash; partly for the purpose of doing the work more 
cheaply, and partly in order to dispel the false notion that the Bank of England is 
somehow a department of State. 
On the Apprenticeship System in reference to the Freedom of Labour. 
By Rozert Napier, of Glasgow. 
On Cottage Gardening and Labourers’ Holdings. By M. NiveEre. 
On some of the Economical Questions connected with the Exffect of the New 
Gold in diminishing the Difficulties of the last few Years. By W. New- 
MARCH, £.S.S. 
On the Recent Legislation relative to Joint-Stock Companies and Joint-Stock 
Banks. By W. Newmanrcn, F.S.S. 
The author began by a historical outline of the subject. Joint-stock companies are 
unknown to the common law ; but the clear necessity of the case enabled many com- 
panies to obtain charters of incorporation, for railway and other purposes, from Par- 
liament in some cases, and from the Crown in others. 
In 1844 an Act of Parliament was passed for the purpose of regulating the incor- 
poration and working of joint-stock companies, both for banking and for other purposes. 
This made the granting of charters of incorporation dependent on the discretion of 
the Board of Trade, and provided a very elaborate administrative system for their 
regulation. It did not touch the question of limited liability, which, until 1856, could 
be conferred only by Parliament. The administrative system thus provided did not 
work satisfactorily ; it was too complex, and gave the public a false idea of security, 
which, in many well-known unhappy cases, proved not to be well-founded. 
In 1856 the well-known Joint-Stock Companies’ Act was passed. A great mass 
of complications was got rid of on that occasion, by laying down the principle, un- 
known to the common law, but necessary at the present time, that incorporation is 
not a favour but a right; and, consistently with that principle, but unlike the Act of 
1844, the administrative machinery it provided for the purpose of registration, publi- 
city, &c., is extremely simple. The Act of 1856 also empowered companies to con- 
stitute themselves with the privilege of limited liability. It did not affect banks 
which remain under the operation of previous acts, nor insurance companies, which, 
from the nature of their business, are able to protect themselves against the common- 
law operation of unlimited liability by treating every policy as a separate contract and 
inserting therein a clause limiting their liability. Thus the question stands at present. 
The author thinks the settlement of the general question of limited liability quite 
satisfactory, owing both to the fairness of the principle and to the simplicity of the 
machinery ; but is inclined to hesitate about its extension to banking companies, in 
consequence of the important difference between companies which trade on their own 
moneys, such as railway and manufacturing companies, and those which, like banks, 
trade in great parton the money of others. It is perhaps reasonable to attach a more 
stringent responsibility to the latter than to the former. At the same time the author 
desires to reserve to himself full liberty of considering any new facts as regards the 
extension of limited liability to banks. 
