408 Jones—Relation of Economic Grises to Legislation. 
from a management in which they had little or no control, by 
having invested a small amount in shares. The conservative 
element staid out of such undertakings. There was little ad¬ 
vantage over private business in a stock company where the con¬ 
trolling interest was in one hand and a few shares only were dis¬ 
tributed to various holders. The joint-stock organization, there¬ 
fore, was left to such as had no fortunes to lose, and who in¬ 
vested in shares as a speculative venture, trusting to a lucky 
turn for success. 1 The same principle acted as a bar to union 
of capital and skill. Monied men would not risk themselves by 
supporting inventors, or by admitting the sale of a few shares 
to those seeking investment for their small savings. About the 
middle of this century the change from unlimited to limited lia¬ 
bility was effected in England, 2 the new privileges being hedged 
about with numerous safeguards. The stockholder is today only 
liable for the unpaid portion of the capital stock represented by 
his shares. 3 The word “limited” must always be attached to 
the company’s name and inserted in its contracts and prospect¬ 
uses. Numerous additional provisions have been made by law. 
It is for example stipulated that the shareholders shall meet 
within four months of organization. No company may purchase 
its own shares 4 or sell them at a discount. If directors draw 
1 Wagner, Lectures on Money and banking, delivered Summer Sem¬ 
ester, 1894. 
2 In 1851 a committee was appointed to investigate the subject. Two 
years later it was referred to a Royal Commission investigating Mercan¬ 
tile law. The following year this body reported against any change. In 
1855 a bill was introduced to limit liability in certain cases. In 
1856, 1857, 1858, 1862 and 1865 the system of limited liability was fully 
established and developed, any seven or more persons being allowed to 
associate themselves in a company with limited or unlimited liability. 
Levi, “Hist, of Commerce,” part IV, ch. VII. 
3 A shareholder’s contract is completed by his letter of application an¬ 
swered by an allotment of shares. If the calls upon present sharehold¬ 
ers are not sufficient to meet the debts of the company, recourse may 
be had against such as were shareholders within a year, but only to 
meet such debts as were contracted while they were still members. 
Campbell, op. cit., pp. 232-242. 
4 The lack of this provision in French law led to manipulations on the 
stock market in the interests of the “Union General.” This was shortly 
