COMMERCE. 



according to a specified agreement or deed of 

 copartnery. He who draws the smallest fraction 

 of profit, failing the others, may be compelled to 

 pay the whole debts. On this account, every 

 partner, on leaving a company, requires to- give 

 notice that he no longer belongs to the firm of 

 which he was a member ; he is then responsible 

 for no debts incurred subsequent to the announce- 

 ment. But although the partners are each liable 

 to the company's creditors for all its debts, the 

 partners, among themselves, are liable only to the 

 extent of their respective shares in the company. 



Public companies are very different : they con- 

 sist of a large body of partners, or proprietors of 

 shares, the aggregate amount of which forms a 

 joint stock, and hence such associations are called 

 joint-stock companies. They are public, from 

 being constituted of all persons who choose to 

 purchase shares, and these shares, or rights of 

 partnership, are also publicly saleable at any time 

 without the consent of the company, unless the 

 company, by its contract of copartnery, have an 

 option of itself purchasing them, and chooses to 

 exercise it The value of a share in a joint-stock 

 company is always the price which it will bring in 

 the market ; and this may be either greater or 

 less, in any proportion, than, the sum which its 

 owner stands credited for in the stock of the 

 company. The liability of members of joint-stock 

 companies may be either ' limited' or ' unlimited.' 

 In the first case, they are liable proportionally for 

 the whole debts of the company. In the second 

 case, they are liable (Act 1867) either to the 

 amount, if any, unpaid on their respective shares, 

 or to such amount as they may respectively have 

 undertaken by the deed of association to contribute 

 in the event of winding-up. By the 'Act to 

 amend the Companies Act, 1862' (1867), com- 

 panies may be constituted with limited liability 

 for ordinary members, and unlimited liability on 

 the part of directors and managers under certain 

 restrictions. Companies constituted under the 

 principal Act may be remodelled in terms of this 

 provision. The Act of 1867 also gives power to 

 reduce the capital of a company. It also makes 

 important provision as to subdivision of shares, 

 and as to ' share warrants to bearer.' In many 

 companies, such as railway companies, their act 

 of constitution limits the liability of shareholders. 

 It is important to note, that where -liability is 

 nominally limited, it may be practically unlimited, 

 by the amount per share called up for working 

 being trifling compared with the amount which 

 there is power to call. No past member is liable 

 if he has ceased to be a member for one year or 

 upwards prior to the commencement of winding- 

 up ; nor is a past member liable, unless it appears 

 to the court that existing members are unable to 

 satisfy the contributions required. A shareholder 

 must take infinite care, in making a transfer 

 of shares, to see that legal formalities are prop- 

 erly gone through, so as to free him from 

 future liability see case of Teasdale re County 

 Palatine Loan and Discount Company (Limited). 

 Commenting on this case, the Economist (No- 

 vember 29, 1873) savs : ' We should be inclined to 

 say, that a shareholder who has shares cancelled, 

 or makes a transfer, should never rest satisfied until 

 he ascertains, by actual inspection of the registry 

 and books of a company, that his connection with 

 it has come to an end. Where there is a contin- 



gent liability, the, business of transfer is not so 

 simple as it seems, and the utmost care should be 

 exercised.' Orders of English, Scotch, or Irish 

 courts, in course of winding-up a company under 

 the Act, may be enforced over the United King- 

 dom. In England and Ireland, the respective 

 Lords Chancellor, with consent of Master of the 

 Rolls, and in Scotland the Court of Session, are 

 empowered to make rules as to winding-up. 



Sometimes the joint stock is not held in shares, 

 but, what comes to the same thing, in stock itself ; 

 that is, instead of the capital originally subscribed 

 by the partners being credited to them in the 

 form of shares, it is credited as so much money ; 

 and thus a partner who sells out, sells not so 

 many shares, but so many pounds of stock ; but 

 the stock, like the shares, may bring a very 

 different price in the market from what it stands 

 rated at in the company's books. 



Capital or Stock. The capital of a merchant is 

 strictly the amount of money which he embarks 

 in his trade that is, employs for buying goods, 

 paying wages of servants, and the various ex- 

 penses of carrying on his business. With a 

 comparatively small capital, a tradesman may 

 carry on a large business by receiving payments 

 shortly after making his outlays. By this means 

 there is a rapid turning-over of money, and 

 small profits upon the various transactions may 

 speedily mount up to a large revenue. For ex- 

 ample, if a tradesman turn over his capital twelve 

 times in the- year, at each time receiving money 

 for what he sells, he can afford to do business on 

 a twelve times less profit than if he could turn 

 over the same capital only once during the year. 

 This leads us to a consideration of credit. 



Credit in business is of the nature of a loan, and 

 is founded on a confidence in the integrity of the 

 person credited, or the borrower. An individual 

 wishes to buy an article from a tradesman, but he 

 has not money to pay for it, and requires to have 

 it on credit, giving either a special or implied 

 promise to pay its value at a future time. This is 

 getting credit ; and it is clear that the seller is a 

 lender to the buyer. In all such cases, the seller 

 must be remunerated for making his loan. He 

 cannot afford to sell on credit on the same favour- 

 able terms as for ready money ; because, if he 

 were to receive the money when he sold the 

 article, he could lay it out to some advantage, or 

 turn it over with other portions of his capital. 

 By taking credit, the buyer deprives the seller of 

 the opportunity of making this profit, and accord- 

 ingly he must pay a higher price for the article, 

 the price being increased in proportion to the 

 length of credit It very ordinarily happens that 

 the seller himself has purchased the article on 

 credit; but as he must pay for this credit, it 

 does not prevent him from charging for the 

 credit which he gives and the risk which he 

 runs by postponed payment A person in busi- 

 ness may take too much credit, and in that case 

 he is said to be overtrading. He may take credit 

 by both or either of two ways : by buying goods 

 with money which he has borrowed with bor- 

 rowed capital, as it is called ; or by buying goods 

 to a greater extent than he can pay for with ready 

 money, and on a promise to pay for them at a 

 future period. In many cases, a trader finds that 

 he can profitably employ more capital in his busi- 

 ness than belongs to him : if he had more goods 



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